The dollar index (DXY00) on Thursday fell by -0.42%.  Thursday’s stock rally curbed liquidity demand for the dollar.  Also, Thursday’s euro strength weighed on the dollar after European tensions eased when President Trump canceled his threats to raise tariffs on goods from countries opposing his bid to acquire Greenland.  Thursday’s US economic news was supportive for the dollar after weekly jobless claims rose less than expected and Q3 GDP was revised higher. 

US weekly initial unemployment claims rose +1,000 to 200,000, showing a stronger labor market than expectations of 209,000.

US Q3 GDP was revised upward by 0.1 to 4.4% (q/q annualized), stronger than expectations of no change at 4.3%.

US Nov personal spending rose +0.5% m/m, right on expectations.   Nov personal income rose +0.3% m/m, weaker than expectations of +0.4% m/m.

The US Nov core PCE price index, the Fed’s preferred inflation gauge, rose +0.2% m/m and +2.8% y/y, right on expectations.

On Wednesday, President Trump said he would refrain from imposing tariffs on goods from European nations that oppose his effort to acquire Greenland.  NATO Secretary General Rutte said on Thursday that a breakthrough over Greenland was secured without discussing the territory’s sovereignty with President Trump, instead focusing on the broader issue of security in the Arctic region. 

The markets are discounting the odds at 5% for a -25 bp rate cut at the FOMC’s next meeting on January 27-28.

The dollar continues to see underlying weakness as the FOMC is expected to cut interest rates by about -50 bp in 2026, while the BOJ is expected to raise rates by another +25 bp in 2026, and the ECB is expected to leave rates unchanged in 2026. 

The dollar is also under pressure as the Fed boosts liquidity in the financial system, having begun purchasing $40 billion a month in T-bills in mid-December.  The dollar is also being undercut by concerns that President Trump intends to appoint a dovish Fed Chair, which would be bearish for the dollar.  Last Friday, Mr. Trump said that he would announce his selection for the new Fed Chair within the next few weeks. 

EUR/USD (^EURUSD) on Thursday rose by +0.54%.  The euro moved higher on Thursday amid dollar weakness. The euro also has carryover support from Wednesday, when President Trump said he would refrain from imposing tariffs on goods from European nations opposing his effort to take possession of Greenland.  The euro added to its gains on Thursday after the Eurozone Jan consumer confidence index rose more than expected to an 11-month high.

The Eurozone Jan consumer confidence index rose +0.8 to an 11-month high of -12.4, stronger than expectations of -13.0.

Swaps are pricing in a 0% chance of a +25 bp rate hike by the ECB at the next policy meeting on February 5.

USD/JPY (^USDJPY) on Thursday rose by +0.07%.  The yen fell to a 1-week low against the dollar on Thursday after a +1.7% rally in the Nikkei Stock Index reduced safe-haven demand for the yen.  The yen also weakened as European tensions eased after President Trump said on Wednesday that he had reached a framework of a deal with NATO on Greenland, which curbed safe-haven demand for the yen.  Losses in the yen were limited ahead of Friday’s BOJ meeting, amid speculation of a hawkish pause by the BOJ to support the yen. 

Thursday’s Japanese trade news was mixed for the yen.  Dec exports rose +5.1% y/y, weaker than expectations of +6.1% y/y.  Conversely, Dec imports rose +5.3% y/y, stronger than expectations +3.6% y/y and the biggest increase in 11 months.

The yen has been under pressure since last Monday’s Yomiuri report that said Japanese Prime Minister Takaichi may dissolve the lower house of parliament at the start of the next parliamentary session on Friday and call a snap election on February 8 or February 15. The yen fell to a 1.5-year low against the dollar last Wednesday due to concerns that Takaichi’s expansionary fiscal policy will persist and that the long-term inflation outlook will rise if the ruling LDP party secures a majority in a snap election. 

The markets are discounting a 0% chance of a BOJ rate hike at the next meeting on January 23.

February COMEX gold (GCG26) on Thursday closed up +75.90 (+1.57%), and March COMEX silver (SIH26) closed up +3.735 (+4.03%). 

Gold and silver prices rallied sharply on Thursday, with Fed gold and Mar silver posting new contract highs. Also, nearest-futures Jan gold (GCF26) posted a new all-time high of $4,908.80 an ounce, and nearest-futures Jan silver (SIF26) posted a new record high of $95.98 a troy ounce.

Thursday’s weaker dollar was a bullish factor for metals prices.  Gold also found support after Goldman Sachs raised its year-end gold price target to $5,400 from $4,900, citing intensifying demand from private investors and central banks.  In addition, concerns that Japan’s expansionary fiscal policies will lead to soaring deficits are boosting demand for precious metals as a store of value. 

Silver prices found support on Thursday after President Trump on Wednesday said he would not impose tariffs on European nations for opposing his stance on Greenland, a positive factor for economic growth.  Also, Thursday’s upward revision to US Q3 GDP is supportive of industrial metals demand and silver prices.   

Precious metals have ongoing support amid safe-haven demand amid uncertainty over US tariffs and geopolitical risks in Iran, Ukraine, the Middle East, and Venezuela.  Also, precious metals are supported by concerns that the Fed will pursue an easier monetary policy in 2026 as President Trump intends to appoint a dovish Fed Chair.  In addition, increased liquidity in the financial system is boosting demand for precious metals as a store of value, following the FOMC’s December 10 announcement of a $40 billion-per-month liquidity injection into the US financial system.

Strong central bank demand for gold is supportive of prices, following the recent news that bullion held in China’s PBOC reserves rose by +30,000 ounces to 74.15 million troy ounces in December, the fourteenth consecutive month the PBOC has boosted its gold reserves. Also, the World Gold Council recently reported that global central banks purchased 220 MT of gold in Q3, up +28% from Q2. 

Fund demand for precious metals remains strong, with long holdings in gold ETFs climbing to a 3.25-year high on Monday.  Also, long holdings in silver ETFs rose to a 3.5-year high on December 23.

More news from Barchart

• Can Silver’s Price Continue to Rise?
• Gold and Silver Hit New Record Highs on Greenland Crisis. 3 Factors That Will Keep Driving Demand.
• Why You Should Play Record Gold Prices with the GLD ETF
• Silver Prices Keep Confounding Experts. I Won’t Be Surprised If They Hit $100 Soon.