Gold Market: Short-term Pressure, Awaiting Non-Farm Payrolls Guidance
On Friday (December 6), in the early Asian trading session, spot gold was trading around $2633.65 per ounce, continuing its narrow fluctuation trend. The previous trading day saw a 0.68% drop in gold prices, hitting a recent low of $2623.46, approaching key support levels. After the release of U.S. initial jobless claims data last week, expectations for a Federal Reserve rate cut in December cooled, putting short-term pressure on gold prices.
Data from the U.S. Department of Labor showed that in the week ending November 30, initial jobless claims moderately increased to 224,000, slightly above the expected 215,000. Continuing claims declined, indicating that the job market remains resilient overall. However, the market will focus more on the performance of November's non-farm payroll report to assess the likelihood of a Fed rate cut. Non-farm payrolls are expected to increase by 200,000, and the unemployment rate may rise to 4.2%.
Geopolitical Situation: Safe Haven Demand Weakens but Concerns Remain
Recently, the impact of geopolitical factors on gold's safe haven demand has weakened. A potential ceasefire agreement between Israel and Hamas has raised hopes for easing tensions in the Middle East. Egypt's ceasefire proposal includes the release of hostages and the opening of passes in the Gaza Strip, leading to stabilized market sentiment. However, escalation in Hezbollah in Lebanon and the situation in Syria could trigger new tensions at any time.
Moreover, the Russia-Ukraine conflict shows no signs of easing. The Russian Ministry of Defense reported intense clashes with Ukrainian forces on multiple fronts over the past day. The market is also paying attention to potential peace mediation in the Russia-Ukraine situation should Trump win the election.
The Dollar and Treasury Yields: Providing Short-term Support to Gold Prices
Although expectations for a Fed rate cut in December have cooled, the dollar index has still slipped slightly this week to 105.72, near recent lows. The yield on the U.S. 10-year Treasury note rose by 1% on Thursday before falling back to 4.178%. The weakening dollar and fluctuating yields have limited the downside for gold.
The market generally believes that the Fed will adopt a more cautious pace with cuts at its December meeting. The CME FedWatch tool shows the probability of a 25 basis point cut in December has decreased from 75% to 70%, further reducing the market's expectation of easing policies.
Trade Data: Economic Resilience Apparent but Growth Outlook Diverges
The U.S. trade deficit in October significantly narrowed by 11.9% to $73.8 billion, with import declines marking the largest drop since the end of 2022, reflecting the dual impact of slowing international demand and supply chain adjustments. Goods imports fell by 5.5%, the largest drop since November 2022. The improvement in the trade deficit may have a positive impact on GDP growth this quarter, but long-term economic growth prospects remain constrained by weak global demand.
Macroeconomic Analysis: Multiple Variables Affecting Growth Path
Currently, the macroeconomic environment is influenced by multiple intertwined factors:
- Employment Market and Rate Cut Expectations
Non-farm employment data and next week's inflation data will determine the Fed's policy path. If the employment market continues to cool and inflation falls, the Fed may cut rates in December, but the pace might be slower. - Geopolitics and Global Demand
Changes in the Middle East situation and the ongoing Russia-Ukraine conflict will affect market safe haven sentiment and supply chain stability. Particularly, fluctuations in energy and food prices could impact the global economic recovery process. - Trade and Dollar Trends
The improvement in the U.S. trade deficit is a short-term boon for economic growth, but the slowdown in the global economy is gradually creating pressure on export demand. The volatility of the dollar and Treasury yields continues to be an important variable in global capital markets.
Gold and Economic Uncertainty Coexisting
In the future, the trend of gold prices will be influenced by multiple factors including Fed policy, employment data, and geopolitical situations. The macro economy faces uncertainty in terms of growth slowdown and policy adjustments, requiring investors to pay attention to various data and risk factors to be prepared for market fluctuations.
