uropean Trading Session
The U.S. dollar remained broadly steady during European morning trade on Thursday, with narrow ranges dominating across most currency pairs. Market participants took a cautious pause following the release of U.S. economic data yesterday, as attention now turns to the upcoming release of the August Personal Consumption Expenditures (PCE) price index later today.
Movements in major currencies were subdued, with antipodean pairs showing slight underperformance, though price swings remained within 15 pips. Elsewhere, other dollar pairs registered negligible changes, staying below 0.1% for the session.
The lack of momentum extended beyond the foreign exchange market. U.S. equity futures were flat, Treasury yields showed no significant variation, and gold prices held steady at around $3,750 per ounce. Market sentiment appears to be in a holding pattern ahead of the critical PCE release, which could shape trading direction heading into the weekend.
Fundamental Overview
Gold exhibited notable resilience in the previous session, defying pressures from stronger U.S. economic data, higher Treasury yields, and a firmer dollar. Under such conditions, a corrective pullback might typically be expected, yet gold prices held firm.
However, the near-term upside remains capped due to a hawkish repricing of interest rate expectations. Markets are currently factoring in 39 basis points of easing by year-end and 100 basis points cumulatively by 2026, compared with the Federal Reserve’s projection of 75 basis points. This divergence suggests further volatility could emerge as rate expectations adjust.
From a broader perspective, gold’s longer-term outlook remains constructive, supported by the likelihood of falling real yields amid the Fed’s dovish policy bias. In the short term, though, stronger U.S. data and hawkish interest rate repricing are expected to trigger intermittent corrections.
Looking Ahead
The focus will soon shift to next week’s key economic releases, including the ISM purchasing managers’ indices and a slate of U.S. labor market data, which remain central to the Federal Reserve’s policy assessment. The ADP employment report and the closely watched Non-Farm Payrolls (NFP) will be the primary highlights, with investors seeking further clarity on the Fed’s path forward.