Let’s dive into the dynamic world of precious metals with a fresh perspective.
This week, the luster of gold seemed to dim a bit, as the precious metal experienced its first dip in value over the past month. The main culprits behind this decline? A robust U.S. dollar and a spike in bond yields. Market eyes are now eagerly set on the upcoming release of the U.S. non-farm payrolls data, expected later today, which could further influence gold’s trajectory.
In more specific terms, spot gold witnessed a slight decrease of 0.2%, settling at $2,038.49 per ounce. Meanwhile, U.S. gold futures also saw a similar downward trend, decreasing by 0.2% to $2,045.40.
Ole Hansen, the head of commodity strategy at Saxo Bank, shared his insights, noting that gold’s trading value has seen a less than 1% drop over the week. This change is largely attributed to unexpectedly strong U.S. economic data, which has consequently driven bond yields higher and reduced expectations of a U.S. rate cut.
The anticipation builds around the U.S. payroll report. A report stronger than expected could put additional pressure on gold, especially if it influences future rate cut expectations.
Recent data revealed that U.S. private employers added more jobs than anticipated in December, a testament to the ongoing resilience of the labor market.
In the bond market, benchmark U.S. 10-year Treasury yields reached a three-week high. Concurrently, the dollar increased by 0.3%, marking its most significant weekly gain since May. This rise in the dollar’s value makes gold more expensive for holders of other currencies.
The focus now shifts to the non-farm payrolls report, scheduled for release at 1330 GMT. This report is crucial for gaining insights into the Federal Reserve’s rate path outlook. Economists, as per a Reuters poll, predict that 170,000 jobs were created in December, which is fewer than the 199,000 in November.
The trading market is currently assessing the probability of a Fed rate cut at its March 20 policy meeting. Last week, the odds were 90%, but they have since dropped to about 66%, as per the CME FedWatch tool.
In other precious metal news, spot silver decreased slightly by 0.1% to $22.96 per ounce. Platinum also experienced a decline, falling approximately 1% to $947.77.
Palladium, not wanting to be left out of the downward trend, dropped 1.3% to $1,023.89 per ounce, marking its ninth consecutive session of decline.
Stay tuned to Traders on Trend for more updates and insights into the ever-evolving world of financial markets.
