Gold prices fell by nearly 2% in the European market on Monday at the start of the final trading week of 2025, retreating from their all-time highs amid accelerating correction and profit-taking activity, in addition to pressure from the continued recovery of the US dollar in foreign exchange markets.

The decline was also driven by reduced safe-haven demand following positive developments in peace talks between Russia and Ukraine, after US President Donald Trump said that both Vladimir Putin and Volodymyr Zelenskyy are showing genuine willingness to reach an agreement to end the war, noting that negotiations have entered their final stages.

Price Overview

• Gold prices today: Gold fell by about 2.0% to $4,445.16, from an opening level of $4,533.42, after recording an intraday high of $4,549.77.

• At Friday’s settlement, gold prices rose by 1.2%, marking a fresh all-time high at $4,550.04 per ounce.

• Gold prices gained 4.5% last week, posting a third consecutive weekly increase and the largest weekly gain since last October, supported by hopes that the Federal Reserve will continue cutting interest rates in 2026.

US Dollar

The US dollar index rose by 0.1% on Monday, extending its gains for a third consecutive session and continuing its recovery from two-and-a-half-month lows, reflecting a broader rebound in the US currency against a basket of major and secondary currencies.

In addition to buying from lower levels, the dollar’s recovery ahead of year-end trading has been supported by short-covering activity, as the US currency approaches its largest annual loss since 2017.

Positive Developments

Following the recent meeting between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy, expectations have risen for tangible progress toward ending the war in Ukraine.

Trump said after the meeting in Florida that both the Russian and Ukrainian sides “want to reach an agreement,” adding that talks have entered a sensitive and advanced phase.

He acknowledged that some outstanding issues still require careful handling, but expressed optimism about the possibility of reaching a settlement in the coming period, boosting market hopes for a geopolitical breakthrough that could support global stability.

US Interest Rates

• According to the CME FedWatch Tool, pricing for the probability of keeping US interest rates unchanged at the January 2026 meeting currently stands at 82%, while the probability of a 25 basis point rate cut is priced at 18%.

• Investors are currently pricing in two US interest rate cuts over the course of next year, while Federal Reserve projections point to a single 25 basis point cut.

• To reprice these expectations, investors are closely monitoring upcoming US economic data, in addition to comments from Federal Reserve officials.

Gold Outlook

Tim Waterer, Chief Market Analyst at KCM Trade, said that the $5,000 level appears to be an achievable target for gold next year, provided the next Federal Reserve chair adopts a more dovish approach to monetary policy.

Waterer added that interest rate cuts, along with continued strong industrial demand and supply constraints, could set the stage for silver to rally toward $100 per ounce in 2026.

SPDR Fund

Gold holdings at the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by about 2.86 metric tons on Friday, bringing total holdings to 1,071.13 metric tons, the highest level since June 22, 2022.

The euro retreated in European trading on Monday against a basket of global currencies, extending its losses against the US dollar for a third consecutive session and pulling back from a three-month high. The decline comes amid ongoing correction and profit-taking, alongside a recovery in the US currency ahead of the close of trading for 2025.

The downside in the single currency is being limited by fading expectations that the European Central Bank will cut interest rates in February 2026, particularly as economic activity in the euro area has improved recently, with forecasts pointing to a continuation of this improvement as downside risks recede.

Price overview

Euro exchange rate today: the euro fell 0.15% against the dollar to 1.1754, from an opening level of 1.1771, after recording a session high of 1.1786.

The euro ended Friday’s session down around 0.1% against the dollar, marking its second consecutive daily loss, as correction and profit-taking continued from the three-month high of $1.1808.

Last week, the euro gained 0.55% against the dollar, its fourth weekly advance in the past five weeks, supported by a narrowing interest rate differential between Europe and the United States.

The US dollar

The dollar index rose 0.1% on Monday, extending its gains for a third straight session and continuing its recovery from two-and-a-half-month lows. This reflects a broader rebound in the US currency against a basket of major and secondary currencies.

Beyond buying from lower levels, the dollar’s recovery ahead of year-end has also been supported by position adjustments and the unwinding of short positions, as the US currency moves toward posting its largest annual loss since 2017.

European interest rates

Money markets currently price the probability of a 25-basis-point interest rate cut by the European Central Bank in February 2026 at less than 10%.

To reassess these expectations, investors are closely monitoring upcoming euro area data on inflation, unemployment, and wage growth.

Interest rate differential

Following the Federal Reserve’s latest decision, the interest rate gap between Europe and the United States has narrowed to 160 basis points in favor of US rates, the smallest differential since May 2022, which supports the euro’s exchange rate against the US dollar.

The Japanese yen rose in Asian trading on Monday at the start of the final trading week of 2025 against a basket of global currencies, moving into positive territory versus the US dollar. The gains came after the summary of opinions from the Bank of Japan’s latest monetary policy meeting showed policymakers agreeing on the need to continue raising interest rates.

Some members warned that the central bank could fall behind the curve in normalizing monetary policy, noting that waiting for another meeting could pose a “significant risk,” given that real interest rates in Japan remain among the lowest globally.

Price overview

Japanese yen exchange rate today: the dollar fell 0.3% against the yen to 156.06, from an opening level of 156.50, after recording a session high of 156.53.

The yen ended Friday’s session down 0.35% against the dollar, marking its first loss in four sessions, after the Japanese government proposed record spending for the next fiscal year.

Last week, the yen gained around 0.8% against the dollar, its first weekly advance in three weeks, supported by buying interest from lower levels and repeated warnings from Japanese government officials about the possibility of intervention to support the local currency.

Summary of Bank of Japan views

Earlier on Monday in Tokyo, the Bank of Japan released the summary of opinions from its latest monetary policy meeting, held on December 18–19, which resulted in an interest rate hike to 0.75%, the highest level since 1995.

The summary showed a clear shift toward a more hawkish stance among most board members, with several pointing to the need for further interest rate increases in the future. Members agreed that gradually raising rates and scaling back monetary stimulus are necessary to ensure long-term price stability.

Some policymakers cautioned that the bank risks lagging behind in the normalization process, stressing that delaying action until another meeting could be risky, as Japan’s real interest rates remain the lowest among major economies.

Several members also noted that Japan’s extremely low interest rates relative to other central banks are contributing to yen weakness, which in turn adds to inflationary pressures through higher import costs.

Bank of Japan Governor Kazuo Ueda said last week that underlying inflation in the country is steadily accelerating and moving closer to the central bank’s 2% target, reaffirming the bank’s readiness to continue raising interest rates.

Japanese interest rates

Market pricing for a quarter-point interest rate hike by the Bank of Japan at its January meeting remains steady at around 20%.

Investors are awaiting further data on inflation, unemployment, and wage growth in Japan to reassess these expectations.

Major Wall Street indexes hovered near record highs in light trading on Friday following the Christmas holiday, as investors bet that further interest rate cuts and strong corporate earnings will push markets to new peaks next year.

The benchmark S&P 500 index touched an all-time intraday high, edging closer to the 7,000-point mark, while the Dow Jones Industrial Average stood just 0.3% below its record set on December 12.

This performance followed a recent rally in US equities after months of choppy selling, during which artificial intelligence-related stocks came under pressure on concerns over elevated valuations and rising capital expenditure weighing on profits.

However, signs of resilience in the US economy, the prospect of a more accommodative monetary policy with the appointment of a new Federal Reserve chair next year, and renewed appetite for AI stocks have supported a market rebound. This has put the S&P 500, Dow Jones, and Nasdaq on track for a third consecutive year of gains.

Brian Jacobsen, chief economist at Annex Wealth Management, said that 2026 is likely to be a testing year for markets, noting that companies will need to deliver tangible gains in productivity and profit margins from artificial intelligence and other investments.

According to data compiled by LSEG, analysts expect S&P 500 earnings to rise by 15.5% in 2026, compared with projected growth of 13.2% in 2025.

The S&P 500 has gained more than 17% since the start of 2025, driven for much of the year by mega-cap technology stocks, although the rally has recently broadened to include cyclical sectors such as financials and basic materials.

Traders are also watching to see whether the so-called “Santa Claus rally” materializes this year. This seasonal pattern typically sees gains in the S&P 500 during the final five trading days of the year and the first two sessions of January, according to the Stock Trader’s Almanac. The period began on Wednesday and runs through January 5.

At 9:39 a.m. Eastern Time, the Dow Jones Industrial Average rose 10.77 points, or 0.02%, to 48,741.93. The S&P 500 added 9.97 points, or 0.14%, to 6,942.02, while the Nasdaq Composite climbed 42.38 points, or 0.17%, to 23,655.69.

Six of the 11 S&P 500 sectors were higher, led by information technology, while utilities and industrials were the weakest performers.

Nvidia shares advanced 1.5% after the AI chip designer agreed to license chip technology from startup Groq and appoint its chief executive.

By contrast, Biohaven shares fell 1.4% after its experimental depression drug failed to meet the primary endpoint in a mid-stage trial, adding to a series of setbacks the company has faced this year.

Coupang shares surged 8.6% after the e-commerce firm said that all customer data leaked from its South Korean operations had been deleted by the suspected perpetrator.

US-listed precious metals miners, including First Majestic, Coeur Mining, and Endeavour Silver, also rose between 1.8% and 3.3%, as gold and silver prices hit new record highs.

Advancing stocks outnumbered decliners on the New York Stock Exchange by a ratio of 1.11 to 1, while declining issues led advancers on the Nasdaq by a ratio of 1.34 to 1.

The S&P 500 recorded 13 new 52-week highs and no new lows, while the Nasdaq Composite posted 18 new highs and 52 new lows over the same period.