Euro rose in European trade against the UK pound, extending gains for the sixth session in row and scaling four-week highs amid ongoing forecasts about upcoming interest rates in Europe and the UK, and analysts now expecting three consecutive ECB rate hikes. 

Conversely, analysts only expect one additional rate hike by Bank of England in May before pausing policy tightening and reviewing developments in the UK.

EUR/GBP rose 0.2% to 0.8864, the highest since March 23, with a session-low at 0.8838, after rising 0.35% on Friday, the fifth profit in row, and the longest such streak of gains since late January.

European Rate Forecasts

A Bloomberg opinion poll showed the European Central Bank is likely to raise interest rates by 25 basis points at the May, June, and July meetings. 

ECB officials have recently asserted the importance of extending policy tightening to combat inflation and bring prices back to targets.

UK Rates

Bank of England is widely expected to raise interest rates by 25 basis points at the May meeting, with estimates about other rate hikes withheld until further assessment of economic developments in the UK.

Now investors await important UK data later this week, that include consumer prices and labor sector data.

Gold prices rose in European trade on Monday, resuming gains after a short hiatus and profit-collecting off 13-month highs, with the precious metal still holding around $2,000.

Such gains come amid negative pressure from dollar's strength, with US inflation forecasts paving  the way from a 0.25% rate hiked in  May. 

Prices Today

Gold prices rose over 0.5% to $2,015.09 an ounce, after losing 1.8% on Friday, the first loss in four days on profit-taking away from a 13-month high at $1,2048 an ounce. 

The Dollar

The dollar index rose 0.3% on Monday for a second session away from one-year lows at 100.79, against a basket of major rivals, in turn heaping pressure on dollar-denominated gold futures. 

Recent US data on inflation expectations for consumers came at 4.6% for one-year inflation, up from 3.6% in the previous reading.

Such estimates raised odds for a 0.25% Fed rate hike in May to 85%, and hurt chances of  rate cuts later this year.

Fed Remarks

Fed member Christopher Waller said the Fed needs to hike interest rates even further, while Atlanta Fed President Raphael Bostic said another 0.25% rate hike by the Fed might allow it to end the cycle of policy tightening. 

Estimates

Gold prices remain highly linked to inflation and employment status in the US, with Citibank analysts expecting $2,075-$2,100 to be a major hurdle for prices, however they remain inclined to expect more gains for gold prices due to strong long-term haven demand. 

The SPDR

Gold holdings at the SPDR Gold Trust fell 2.89 tones on Friday to 927.721 tones, away from 934.08 tones, the highest since March 24.

Dollar rose against most major rivals on Friday as investors process corporate results and latest inflation data. 

Slowing Inflation 

The Federal Reserve's last meeting minutes showed the banking crisis is likely to send the US economy into recession this year.

The March meeting's minutes showcased the discussions between members about the collapse of the Silicon Valley Bank and subsequent disruptions of the financial system.

The meeting minutes noted that as the labor market tightens, main inflation is expected to slow down sharply next year.

Recent US data showed producer prices tumbled in March by the most in 3 years, following consumer prices data that showed a moderate slowdown.

Now markets are pricing a 69% chance of a 0.25% rate hike in May, which will be the last one, while pricing in 0.5% of rate hikes throughout the second half of the year.

While inflation remains much higher than the 2% target, it shows signals of slowdown in the past few months.

And following nine Federal Reserve rate hikes last year, the bank is now expected to slow down the pace of policy tightening considerably.

Otherwise, US retail sales fell 1% in March, while analysts expected a drop of 0.4%. 

Core sales, excluding energy and food, fell 0.8%, while analysts expected a 0.4% drop.

On trading, the dollar index rose 0.6% to 101.5 as of 21:11 GMT, with a session-high at 101.7, and a low at 100.7. 

Aussie

AUD/USD fell 1.1% as of 21:41 GMT to 0.6708. 

Loonie

Canadian dollar fell 0.2% to 0.7481 as of 21:41 GMT. 

Silver prices rose in European trade for the fourth straight session, trading above $26 an ounce for the first time in a year and almost marking the fifth weekly profit in a row as the dollar declined against major rivals and actual demand is expected to improve in China. 

The dollar index fell to one-year lows after data showed US producer prices tumbled in March, bolstering the case for an end to the cycle of policy tightening by the Federal Reserve.

In China, exports climbed unexpectedly in March, in a sign the Chinese economy is rebounding quickly from the fallout of the recent Covid 19 shutdowns. 

Silver Prices Today

Silver prices rose over 1% to $26.09 an ounce, the highest since April 2022, with a session-low at $25.78, while marking a profit of 1.3% yesterday, the third profit in a row as most dollar-denominated metals gain ground.

Weekly Trading

Silver prices are up 4.5% so far this week, on track for the fifth weekly profit in a row, the longest such streak of gains since January 2022.

The Dollar

The dollar index fell 0.2% on Friday for the fourth straight session, plumbing one-year lows at 100.79 against a basket of major rivals.

A weaker dollar makes dollar-denominated silver futures cheaper to holders of other currencies.

Dollar was hurt following US inflation data that showed consumer prices fell to two-year lows in March, while producer prices declined by the most in three years during March.

Inflation has slowed down in the US amid signs of impending US recession, which prompted speculation the Fed will end the cycle of policy tightening soon.

Now markets are pricing a 69% chance of a 0.25% rate hike in May, which will be the last one, while pricing in 0.5% of rate hikes throughout the second half of the year.

Chinese Demand

Recent data showed Chinese exports surged 14.8% in March, confounding economists who expected a 7% decline, after dropping 6.8% in February.

Such data shows the true recovery of the Chinese economy, the world's largest metals and commodities consumer from the fallout of the Covid 19 shutdowns.