On the morning of January 13th, in the Asian market, spot gold held near a four-week high, trading around $2,690 per ounce. Last Friday (January 10th), gold prices continued to rise, reaching a peak of $2,697.87, the highest since December 12th, closing at $2,689.13. Although strong U.S. non-farm payrolls weakened expectations of a Federal Reserve rate cut, the uncertainty of Trump's policies and geopolitical risks enhanced gold's appeal as a safe haven.
Strong Non-farm Data Weaken Rate Cut Expectations
The U.S. December non-farm employment report showed an increase of 256,000 jobs, far exceeding the market expectation of 160,000, with the unemployment rate dropping from 4.2% to 4.1%. A strong job market reinforced the Federal Reserve's cautious stance on further monetary easing, with the market expecting the Fed to keep rates unchanged at the January meeting. The Fed may only cut rates once in June this year, or possibly not at all.
However, although non-farm data temporarily pressured gold prices, safe haven demand quickly pushed gold back to a four-week high, achieving a weekly gain of 1.88%.
Trump's Policies Spark Inflation and Geopolitical Concerns
As Trump's inauguration on January 20th approaches, investors are anxious about the uncertainty of his policies. Trump's threat to impose high tariffs on imports has sparked inflation worries, further limiting the Fed's room for rate cuts. Canada's foreign minister indicated the possibility of retaliatory measures, including cutting off energy exports, reflecting market concerns about escalating trade tensions.
In terms of geopolitical issues, Yemen's Houthi forces claim to have attacked the U.S. aircraft carrier USS Harry Truman, while ceasefire talks in Gaza have stalled. The U.S. has imposed stricter oil sanctions on Russia, aiming to restrict Russian oil revenues and gain leverage in peace negotiations for Ukraine. These tensions have increased gold's appeal as a safe haven.
Market Outlook and Investor Confidence
According to a Kitco News survey, more than half of the investors are bullish on gold, considering it the best safe haven asset amid current global uncertainties. Independent metal trader Tai Wong pointed out that the gold price movement indicates a lack of firm selling pressure, demonstrating the resilience of the gold market.
Caution Against Short-term Fluctuations and Market Focus
Despite the strong gold trend, the rise in the dollar and U.S. bond yields could pressure gold prices. Last Friday, the dollar index reached 109.97, its highest since November 2022, while the yield on the 10-year U.S. Treasury rose to 4.79%. Pepperstone strategist Michael Brown warned that profit-taking may occur before Trump's inauguration, suggesting the need to guard against a short-term gold price correction below $2,700.
In the future, investors should pay attention to upcoming U.S. inflation and consumer data, as well as speeches from Federal Reserve officials. Geopolitical events, such as progress on the Gaza ceasefire agreement and the follow-up impact of U.S.-Russia sanctions, will also be key market focuses. Overall, supported by safe haven demand, gold is expected to remain resilient, though short-term volatility risks must be heeded.
