The price of gold touched a record high of $2,800 during the early part of the European session on Friday. As risk sentiment stabilizes, traders are closely monitoring the subdued action of the US Dollar. Meanwhile, regional inflation in Germany cooled off in January, exerting pressure on the EUR/USD pair, which fell below 1.0400. This comes as the European Central Bank (ECB) cut interest rates again by 25 basis points.
Gold's upward trajectory is attributed to several factors. The demand for the safe-haven bullion remains strong amid geopolitical tensions and US President Donald Trump's tariff threats, which are causing unease in global markets. As a result, investors are flocking to gold as a hedge against volatility.
In the forex market, the EUR/USD pair is experiencing renewed selling pressure ahead of the eagerly anticipated nationwide data release. The cooling inflation in Germany has contributed to this downward trend, exacerbated by the ECB's decision to cut rates further. This monetary easing suggests that the ECB may continue its current cycle of rate cuts in an attempt to stimulate economic growth.
In contrast, the GBP/USD trades in a narrow range above 1.2400 during the European session. This stability is partly due to traders digesting recent developments, including President Trump's tariff threats and their potential impact on the global economy.
Additionally, market participants are awaiting the release of the US Personal Consumption Expenditures (PCE) data. This data will provide crucial insights into consumer spending and inflation in the United States, potentially influencing future monetary policy decisions by the Federal Reserve.