Gold prices fell to $2,664 after the US shared its job report, which showed strong growth. However, as the US dollar and bond yields dipped from their daily highs, gold quickly bounced back. During the week, gold traded between $2,614 (January 6) and $2,698 (January 10), closing Friday up 0.75% at $2,690—an increase of around 2% for the week.
Key Highlights:
– The US added 256,000 jobs in December, much higher than the expected 165,000.
– The unemployment rate dropped to 4.2%, slightly better than the forecast of 4.20%.
– Average hourly earnings rose by 0.3% for the month, matching expectations, but annual wage growth was at 3.9%, just below the 4% estimate.
– There was a minor adjustment of -8,000 jobs in the past two months, keeping the labor force participation rate steady at 62.5%.
– The University of Michigan’s consumer sentiment index fell to 73.2, lower than the expected 74.
– Short-term inflation expectations over one year remain at 3.3%, higher than forecasts.
Earlier in the week, job openings in the US exceeded expectations, and the ISM Services Index showed strong growth.
What’s Coming Up:
Next week, important US reports will include Producer Price Index (PPI), Consumer Price Index (CPI), and retail sales. China will also release its GDP and trade data.
Gold ETFs:
As of January 9, global gold ETF holdings reached 82.874 million ounces, up slightly from the previous week.
US Yields and Dollar:
Expectations of a rate cut by the Federal Reserve have shifted to later in the year, as yields on long-term bonds rose above 5%. The US Dollar Index hit a high of 109.96, the highest in over two years, closing with a gain and showing general strength.
China’s Position:
China’s government confirmed that it has room to use fiscal policies to navigate challenges.
UK Concerns:
UK assets have struggled due to worries about borrowing and slow growth, worsened by new tariffs proposed by the incoming US government.
Federal Reserve Insights:
US Fed Governor Waller expects inflation to drop to the target of 2%, anticipating more rate cuts shortly. His comments positively affected commodities.
Market Outlook:
Gold’s recent rise was mainly due to the slight drop in the dollar and yields. Despite inflation worries and UK issues, sustaining higher gold prices may be tough because of the strong job data, dollar strength, and high yields. Gold may dip to $2,650 before testing resistance at $2,750. Traders might sell gold during any rallies, keeping a close eye on price movements
Leave a Reply