Gold heads to second weekly loss in row as haven demand recedes
Gold prices fell on Friday on track for the second weekly loss in a row as haven demand receded after the Israel-Iran ceasefire and the progress in US-China trade talks.
Gold spot prices fell 1.2% to $3288 an ounce, marking a weekly drop of 2.3%, while US gold futures fell 1.4% to $3300.
Improving Risk Appetite Pressures Gold
As the Middle East tensions calm down, with both Iranians and Israelis resuming their normal lives after 12 days of the worst military confrontation ever between both countries, demand on gold and other safe havens took a hit.
US-China Rare Earth Minerals Agreement
White House officials said the US reached an agreement with China to accelerate shipments of rare earth minerals to the US.
Now investors await US Core Personal Consumption Expenditure data later today, crucial for Fed’s monetary policies.
Analysts expect a 0.1% monthly increase and a 2.6% yearly increase.
US Interest Rates
Markets currently expect US interest rates to be down by 63 basis points this year, starting September.
As for the performance of other precious metals:
Spot silver prices fell 0.5% to $36.44 an ounce
Platinum lost 2.8% to $1378 an ounce away from 11-year highs
Palladium rose 0.3% to $1135 an ounce, the highest since October 2024
Euro rises to 2021 highs against US dollar
The euro rallied to four-year highs against the dollar as investors await the results of the US-Eurozone trade negotiations before the final July deadline.
As the Iran-Israel geopolitical tensions calm down following the ceasefire, the markets now focus on the US monetary policy.
A recent announcement by US President Trump on choosing an early candidate for the Fed Chair job to undermine Powell, raised concerns about the independence of the Fed.
Trump once again criticized Powell for refusing to cut interest rates, and asserting Powell will leave his position soon.
Powell told the Senate of the need to be cautious with monetary policies, as Trump’s tariffs represent a risk to inflation.
Euro Performance
The EUR/USD pair fell mildly to $1.16885, after hitting September 2021 highs earlier at $1.1745.
The dollar index remains near March 2022 lows at 97.398 on track for a 2% loss in June, the sixth consecutive month of losses.
Investors await any signs of progress in the US-EU trade negotiations, with the German Chancellor Merz calling for a “quick and simple trade deal” with the US.
US-China Rare Earth Minerals Agreement
White House officials said the US reached an agreement with China to accelerate shipments of rare earth minerals to the US.
Otherwise, a weaker dollar pushed the Aussie to a seven-month peak at $0.6564 on Thursday.
Other emerging currencies also surged, with the Taiwanese dollar up to April 2022 highs.
France Calls for Steps to Boost Euro
France has pushed EU members to take additional measures to boost the euro’s status as the world’s global currency reserve.
It’s a years-long push from Paris to support joint borrowing and fiscal unity among EU members to underline the euro’s position around the world.
IMF Chief Gorgeiva also said there’s a huge opportunity for the euro to play a larger global role, which is another sign of the decline of the dollar’s appeal worldwide.
ECB President Christine Lagarde called this “the euro’s global moment”, but EU countries need to reform to take this chance and provide a larger offering of safe havens.
She noted that total EU debt is only 89% of total GDP, compared to 124% in the US, giving the EU a unique chance at providing high-quality safe assets.
Oil rises marginally on geopolitical caution
Oil prices rose marginally on Thursday amid ongoing caution and uncertainty about the Iran-Israel ceasefire.
The oil market was boosted after official EIA data showed US crude stocks fell for the fifth straight week.
On trading, Brent August futures rose 0.10%, or 5 cents to $67.73 a barrel.
US crude futures due in August rose 0.5%, or 32 cents to $65.24 a barrel.
Wall Street climbs after GDP and labor data
US stock indices rose on Thursday after recent data confirmed the strength of the labor sector.
Earlier government data showed US unemployment claims down to 236 thousand in the week ending June 21, while analysts expected 244 thousand.
US GDP shrank 0.5% y/y in the first quarter according to the final reading, compared to a 0.2% contraction in the previous reading.
On trading, Dow Jones rose 0.7% as of 15:38 GMT, or 286 points to 43,270 points, while S&P 500 added 0.5%, or 34 points to 6126 points, as NASDAQ climbed 0.5%, or 112 points to 20086 points.