Gold prices rose in European trading on Friday, extending gains for a third consecutive day in a renewed attempt to hold above the $5,000 per ounce level, supported by safe-haven demand amid geopolitical tensions between the United States and Iran.

However, gains in the precious metal were limited by the rise of the US dollar in foreign exchange markets, which has been supported by declining expectations for near-term US interest rate cuts. To reassess those expectations, traders are awaiting a series of important US economic data releases later today.

Price Overview

Gold prices today: gold rose by 0.9% to $5,039.76, up from the opening level of $4,996.62, while recording a session low of $4,982.02.

At Thursday’s settlement, gold prices gained 0.4%, marking a second consecutive daily increase, as the metal continued recovering from a two-week low of $4,841.43 per ounce.

Geopolitical tensions

US President Donald Trump issued a strongly worded warning to Iran, giving it roughly 10 to 15 days to reach a “meaningful agreement” regarding its nuclear program and warning of “serious consequences” in the event of failure.

The warning came after the second round of indirect US-Iran talks concluded with cautious optimism, as Iranian Foreign Minister Abbas Araghchi announced that a “shared understanding on guiding principles” for a potential agreement had been reached.

The political track coincided with the largest US military buildup in the region in two decades, including the approach of the aircraft carrier Gerald Ford, amid reports of plans for “limited” strikes aimed at pressuring Tehran.

US dollar

The dollar index rose by 0.25% on Friday, extending gains for a fifth consecutive session and recording a four-week high at 98.08 points, reflecting continued strength in the US currency against a basket of global currencies.

As is well known, a stronger US dollar makes gold bullion priced in dollars less attractive for buyers holding other currencies.

The rise comes as investors focus on buying the dollar as one of the most attractive opportunities in the foreign exchange market, especially with growing expectations that US interest rates will remain unchanged during the first half of this year.

Federal Reserve minutes

Minutes from the Federal Reserve’s latest meeting, held on January 27–28 and released on Wednesday, showed a divide among policymakers regarding the appropriate path for US interest rates, noting that the new chair, expected to take office in May, may face challenges in pushing through any rate cuts.

The minutes also indicated that some members expect productivity gains to help ease inflationary pressures, although “most participants” warned that the path toward lower inflation could be slow and uneven. Some even suggested that further rate hikes could be considered if inflation remains above target.

US interest rates

Following the above minutes, and according to the CME Group FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting rose from 90% to 95%, while the probability of a 25 basis point rate cut fell from 10% to 5%.

To reprice these expectations, traders are awaiting a series of key US economic releases throughout the day, including fourth-quarter gross domestic product data, December personal consumption expenditures figures, and data from the main sectors of the US economy.

Gold outlook

Brian Lan, Managing Director at Singapore-based dealer GoldSilver Central, said that precious metals are currently consolidating with a slight downward bias, noting that the rebound in the US dollar from recent lows has put some pressure on precious metal prices.

Goldman Sachs said in a note that under its baseline scenario, central bank gold purchases are expected to accelerate, while retail investor demand is likely to increase only in response to Federal Reserve rate cuts, which could push gold prices to $5,400 per ounce by the end of 2026.

SPDR Gold Trust

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 3.14 metric tons on Thursday, bringing total holdings to 1,078.75 metric tons, rebounding from 1,075.61 metric tons, which marked the lowest level since January 15.

The euro declined in European trading on Friday against a basket of global currencies, extending its losses for a third consecutive day against the US dollar, trading near a four-week low and heading toward its biggest weekly loss this year. The move comes as investors focus on buying the US currency after expectations for near-term Federal Reserve rate cuts declined.

As inflationary pressures ease on policymakers at the European Central Bank, expectations for at least one European interest rate cut this year have strengthened. To reassess those expectations, investors are awaiting the release of February data on Europe’s key economic sectors later today.

Price Overview

The euro exchange rate today: the euro fell against the dollar by around 0.2% to $1.1750, from an opening level of $1.1773, while recording a session high of $1.1776.

The euro ended Thursday’s trading down 0.1% against the dollar, marking its second consecutive daily loss, and recorded a four-week low of $1.1742 following the release of strong US economic data.

Weekly trading

Over the course of this week’s trading, which officially ends at today’s settlement, the single European currency, the euro, is down by about 1.0% against the US dollar so far, on track for its second weekly loss in the past three weeks and its largest weekly decline since November 2025.

US dollar

The dollar index rose by around 0.2% on Friday, maintaining gains for a fifth consecutive session and trading near a one-month high at 98.07 points, reflecting continued strength in the US currency against a basket of major and secondary currencies.

The rise comes as investors focus on buying the dollar as one of the most attractive opportunities in the foreign exchange market, particularly after strong US economic data and the Federal Reserve minutes reduced expectations for US rate cuts during the first half of this year.

According to the CME Group FedWatch tool, pricing for keeping US interest rates unchanged at the March meeting is currently stable at 95%, while the probability of a 25 basis point rate cut stands at 5%.

To reprice these expectations, investors are awaiting a series of key US economic data releases throughout the day, including fourth-quarter gross domestic product figures, December personal consumption expenditures data, and readings from the main sectors comprising the US economy.

European interest rates

Data released recently in Europe showed a slowdown in headline inflation levels during December, indicating easing inflationary pressures on the European Central Bank.

Following these figures, money markets raised pricing for a 25 basis point interest rate cut by the European Central Bank at its March meeting from 10% to 25%.

Traders also adjusted their expectations from keeping rates unchanged throughout the year to anticipating at least one 25 basis point cut.

Investors are now watching the release of February data from Europe’s key economic sectors throughout the day to reassess the above expectations.

The Wall Street Journal reported that Christine Lagarde intends to complete her term at the European Central Bank.

The Japanese yen declined in Asian trading on Friday against a basket of major and secondary currencies, extending its losses for a second consecutive day against the US dollar and approaching its lowest level in a week. The currency is on track for its biggest weekly loss this year, amid weakening expectations for a Japanese interest rate hike before next September.

The reduced likelihood of near-term monetary tightening in Japan is attributed to the expected expansionary fiscal policies of Prime Minister Sanae Takaichi, in addition to easing inflationary pressures on policymakers at the Bank of Japan.

Price Overview

The Japanese yen exchange rate today: the dollar rose against the yen by 0.2% to 155.31 yen, up from the opening level of 154.99 yen, while recording a session low of 154.87 yen.

The yen ended Thursday’s session down 0.15% against the dollar, marking its second consecutive daily loss, and recorded a one-week low of 155.34 yen, driven by strong Japanese investment spending in the United States.

Weekly trading

Over the course of this week’s trading, which officially concludes at today’s settlement, the Japanese yen has fallen by around 1.75% against the US dollar so far, putting it on track for its largest weekly loss this year, specifically since July 2025.

Core inflation

Data released today in Tokyo showed that Japan’s core consumer price index rose by 2.0% in January, the slowest pace since January 2024, in line with market expectations for a 2.0% increase, compared with a 2.4% rise in December.

These figures clearly indicate continued easing of inflationary pressures on policymakers at the Bank of Japan, reducing the chances of a Japanese interest rate hike during the first half of this year.

Views and analysis

Abhijit Surya, Chief Economist for Asia-Pacific at Capital Economics, said today’s data is unlikely to create a sense of urgency at the Bank of Japan to resume its monetary tightening cycle, particularly amid weak economic activity in the last quarter.

Surya added that if recent weakness proves temporary, and wage growth improves while underlying price pressures remain relatively firm, there is still a strong case for the bank to raise interest rates again in June.

Japanese interest rates

Following the above data, market pricing for a quarter-point interest rate hike by the Bank of Japan at its March meeting dropped from 10% to 3%.

Pricing for a quarter-point rate hike at the April meeting also declined from 50% to 30%.

According to the latest Reuters poll, the Bank of Japan may raise interest rates to 1% in September.

Investors are now awaiting further data on inflation, unemployment, and wage levels in Japan to reassess those expectations.

Some of you may remember devouring paperback science-fiction novels with bold futuristic covers and imagining the worlds created by Isaac Asimov, Arthur C. Clarke, Robert Heinlein, and Ray Bradbury: planetary entrepreneurs, galactic empires, and firemen who burned books. In 1941, Asimov wrote a story about solar power stations in space transmitting energy back to Earth. Later, in 1951, Arthur C. Clarke explained in his book “The Exploration of Space” how satellites could be used for communications, while also referring to an older German idea dating back decades that proposed placing mirrors in space to reflect warming rays toward Earth — an early concept of climate control.

Moving forward to 1968, Peter Glaser, a consultant at Arthur D. Little, proposed building a solar power satellite. In 1989, a NASA committee issued a report on constructing fusion power stations on the Moon, and several committee members, including Glaser, argued that solar-powered satellites might be a better idea.

At this point, you may think that the concept of solar power satellites has led nowhere for nearly a century. And indeed, it may seem difficult to market such an idea to an industry still reliant on coal and struggling to keep the lights on during and after severe storms. But Elon Musk has entered the discussion, announcing that within three years he plans to place AI data centers powered by solar energy in space and beam data back to Earth. Jeff Bezos made a similar prediction late last year. More cautious observers believe the project could take ten years.

The economics are not yet viable. But we are talking about technology pioneers with ambitious visions and armies of enthusiastic investors eager to capture the next big opportunity, so fluctuating economic calculations are unlikely to stop them. Once such projects are built, the technology remains even if the original founders fail to achieve the financial returns they expected.

Now to the energy markets. If it becomes possible to launch a satellite equipped with solar panels to power AI data centers that consume electricity equivalent to a small city, would it be much harder to launch a solar power satellite capable of beaming enough energy to Earth to supply a small city? And would solar power satellites become suppliers for microgrids and small-scale systems, or for large centralized grids? We once believed the latter would be the answer, but we are no longer certain.

If space technology pioneers succeed, what would that mean for electricity demand on Earth from AI data centers, which have now become the only growth engine for the power industry, after the Donald Trump administration effectively declared that decarbonization and electric vehicles are “un-American”?

Have we been overreading science fiction? Science-fiction writers predicted submarines, travel to the Moon, ray weapons, mass surveillance, satellites, and intelligent — even malevolent — computers. They had vision. How many visionary executives in the electricity industry have you met recently?