On January 16, with the release of the latest U.S. economic data, expectations for a Federal Reserve rate cut this year intensified. The dollar and U.S. Treasury yields softened, and alongside dovish remarks from Fed officials, gold prices surged to break a one-month high. Gold closed up by $18.17, or 0.67%, ending at $2,714.35 per ounce.
According to Alex Ebkarian, COO of Allegiance Gold, the higher-than-expected initial jobless claims indicated a weakening labor market, which pushed down U.S. Treasury yields, enhancing gold's appeal. At the same time, weak core CPI data for December bolstered market bets that the Fed might adopt a more dovish monetary policy.
As Trump is about to take office, market expectations regarding his economic policies are constantly shifting. U.S. media reported that Trump's team is adjusting its foreign policy and has asked several top-level diplomats handling State Department personnel to resign, possibly signaling significant changes to the diplomatic team under the Trump administration. Trump's policies, particularly on trade and taxes, could have a significant impact on U.S. inflation.
Meanwhile, expectations for a rate hike by the Bank of Japan are also rising. Bloomberg reported, citing sources, that if Trump does not cause excessive negative impacts after taking office, the Bank of Japan could likely raise interest rates at its meeting on January 24. The market's expectations for a BOJ rate hike have increased rapidly, leading to a significant rise in the yen.
In the energy market, international oil prices fell after Israel and Hamas reached a ceasefire agreement. February delivery of West Texas Intermediate crude fell by 1.7% on the New York Mercantile Exchange, closing at $78.68 a barrel. Brent crude also dropped 0.9%, closing at $81.29 a barrel. The easing of tensions in the oil market partly came as the Middle East situation showed some relief, with the market beginning to watch for potential impacts of the Trump administration on global energy supply.
Moreover, Bank of America's financial report showed a surge in trading activity in the fourth quarter, leading to profit growth, indicating a recovery in the U.S. financial markets. In the luxury market, Richemont Group achieved double-digit growth during the holiday shopping season, pushing up stock prices across the luxury goods sector, with great expectations for the recovery of the luxury market.
Overall, with Trump's imminent inauguration, market sentiment is full of uncertainty. From the Fed's monetary policy to the Trump administration's economic plans and the changes in the Middle East situation, global market volatility remains high, requiring investors to closely watch upcoming economic data and policy changes.
