Gold prices rose in European trade on Friday for the first session in four days, moving away from two-week lows while holding their ground above $2300 as the dollar stalls.

Despite the gains, gold is still heading for the second weekly loss in a row, amid slower haven demand as global trade negotiations progressed, and amid weak odds of a Fed rate cut in the first half of the year.

Now investors await the crucial US payrolls data, which will help determine the future path of monetary policies by the Fed.

Prices

Gold prices rose 0.6% today to $3258 an ounce, with a session-low at $3227.

On Thursday, gold lost 1.5%, the third loss in a row, plumbing two-week lows at $3202 as the dollar strengthened. 

Weekly Trades

Gold is down 1.85% so far this week, on track for the second weekly loss in a row.

US Dollar

The dollar index fell 0.3% on Friday moving away from a three-week high at 100.38, and on track for the first loss in four sessions.

It comes as investors shun off new positions before US payrolls data.

Trade Developments

Chinese reports said the US has communicated with China recently to discuss tariffs, with President Donald Trump saying there’s a high probability of reaching a deal with China.

He also pointed to potential trade deals with India, South Korea, and Japan soon, as he seeks to utilize his tariffs to force beneficial results.

US Rates

Several Fed officials don’t believe there’s an urgent need to review monetary policies soon.

According to the Fedwatch tool, the odds of a Fed 0.25% rate cut in May stood at just 8%.

The odds of such a cut in June stood at a healthier 65%.

US Labor data

Later today, the US payrolls report will be released, expected to show the addition of 138 thousand new jobs in April, down from 228 thousand in March, while unemployment is expected unchanged at 4.2%.

SPDR

Gold holdings at the SPDR Gold Trust rose 1.15 tons yesterday to a total of 945.41 tons, moving away from April 9 lows.

Euro rose in European trade on Friday on track for the first profit in four sessions against the dollar, moving away from two-week lows on short-covering.

Despite the gains, the common currency is heading for the second weekly loss in a row on concerns about a wider US-eurozone interest rate gap.

The European Central Bank is widely expected to cut interest rates in June, while the Federal Reserve is unlikely to change policies this month.

The Price

The EUR/USD price rose 0.25% today to $1.1315, with a session-low at $1.1274.

The price fell 0.4% on Thursday, plumbing two-week lows at $1.1265 following strong US manufacturing data.

Weekly Trades 

The euro is down 0.45% so far this week against the dollar, on track for the second weekly loss in a row.

European Rates

Sources reported that some ECB officials see a high chance of a rate cut in June.

President of the Deutsche Bundesbank Joachim Nagel said that German recession this year can’t be ruled out.

European Central Bank President Christine Lagarde said the impact of tariffs could be seen on the PMI and unemployment numbers.

Lagarde expects the tariffs to have more of a deflationary role on prices rather than inflationary. 

Markets are currently pricing in a 60% chance of an ECB interest rate cut in June. 

The US-eurozone interest rate gap expanded to 210 basis points after the European Central Bank cut rates in April, with the gap potentially expanding in upcoming months.

US Rates

According to the Fedwatch tool, the odds of a Fed 0.25% interest rate cut in May stood at 8%.

The odds of such a cut in June stood at 56%, with traders now awaiting the all-important US payrolls data later today to gather more clues.

The Japanese yen fell in Asian trade on Friday against a basket of major rivals, extending losses against the dollar for the fourth straight session and plumbing three-week lows, and about to mark the second weekly loss in a row.

The losses are due to the Bank of Japan’s policy meeting, which was more cautious than expected, followed by somewhat bearish remarks by BOJ Governor Kazuo Ueda, hurting the odds of a rate hike in June.

The Price

The USD/JPY pair rose 0.4% today to 145.92, the highest since April  10, with a session-low at 145.14.

The yen lost 1.6% on Thursday against the greenback, the largest such loss in 2025 following the BOJ’s policy meeting.

Weekly Trades

The yen is down 1.6% so far against the dollar this week, on track for the second weekly loss in a row.

The BOJ

The Bank of Japan voted today to hold interest rates unchanged at 0.5%, the highest since 2008 as expected.

The vote was unanimous in favor of holding interest rates, as policymakers prefer to take more time to assess the impact of US tariffs on the export-heavy economy.

Policy Statement

The BOJ said in its policy statement that it’ll continue hiking interest rates if the economic and inflationary predictions were carried out.

It said it’ll continue to monitor economic developments and price without any preset projections, with a heavy reliance on data.

Economic Forecasts

The Bank of Japan reduced its 2025 growth forecasts from 1.1% to 0.5%, and the 2026 growth forecast from 1% to 0.7%.

It also reduced 2025 inflation forecasts to 2.2% from 2.4%, and the 2026 forecasts to 1.8% from 2.1%.

Japanese Rates

The current odds of a BOJ interest rate hike in June fell below 25%.

Now traders await more crucial Japanese inflation, wages, and unemployment data in upcoming days to gather more clues.

US West Texas Crude oil price tumbled 4% after reports about Saudi Arabia being prepared to tolerate current low oil prices, and could even announce production hikes next week.

On Wednesday, Reuters was told by five unnamed sources that the Saudis don’t intend to bolster the market with more supply cuts, as Riyadh’s advantage of being able to tolerate low prices is sustainable.

In fact, reports indicate the Saudis might even try to expand their market share after sacrificing for OPEC+ voluntary production cuts for too long.

Earlier this month, OPEC+ announced plans to accelerate the cartel’s plan to gradually remove voluntary production cuts through an aggressive output hike in May, amounting to 411 thousand bpd.

It also seems that the Saudi are trying to appease the Trump administration, which called on OPEC to intervene and reduce fuel prices through increasing production.

IMF’s Position

The International Monetary Fund expects recent gains in non-oil sectors in the Gulf region to compensate for the impact of lower prices.

In its latest report, the IMF expects the Gulf Cooperation Council’s countries to grow by 3% in 2025, and by 4.1% in 2026.

In order to stabilize the markets, OPEC+ has cut its total output by nearly 5.85 million bpd, or 5.7% of total global supplies, since 2022.

In March however, the organization went ahead with decisions to start hiking production from April and abandon the drive to reduce supplies.

Regional Outlook

The IMF expects the Middle East and North Africa region to grow by 2.6% in 2025, and 3.4% in 2026.

It’s a marked reduction from previous forecasts of a 4% growth rate in 2025, and 4.2% in 2026.

The IMF expects Saudi Arabia’s GDP to grow by 3% this year, and 3.7% next year, which is higher than its neighbors. 

Bahrain is expected to grow by 2.8% in 2025, with Qatar estimated at 2.4% this year, and Oman at 2.3%.

In another sign of brisk growth, the S&P ratings company raised Saudi Arabia’s credit rating from A to A+ with a stable outlook.

The fastest growing economy in the region is expected to be the UAE at 4% this year and 5% in 2026.

Facing Challenges

In its report, the IMF identified different challenges that could impact growth negatively, including trade tensions, geopolitical struggles, and climate shocks. 

Geopolitical tensions could disrupt trade, tourism, supply lines, and increase refugee dispersions in the region.

The IMF noted that the Middle East and North Africa remain highly exposed to extreme weather conditions, including drought and floods, which could impact growth.