Gold prices rose for the fourth consecutive day, with bullion trading near $2,680 an ounce, marking a gain of more than 1% in the first full trading week of the year. Traders are awaiting the release of December’s US payrolls data, which are expected to show healthy yet moderating job growth—an indicator that economists believe will continue into 2025.
Federal Reserve officials have signaled their intention to hold interest rates at current levels for an extended period, with rate cuts unlikely until inflation meaningfully cools. Lower rates typically benefit non-yielding assets like gold, which has shown strong performance recently.
Strong Performance in 2024
Gold was one of the best-performing major commodities last year, logging a 27% gain. This surge was fueled by the Fed’s rate cuts, central banks increasing their gold holdings, and investors seeking a safe haven amid geopolitical tensions. As President-elect Donald Trump prepares to take office on January 20, investors are also considering the potential for a trade war or other disruptions that could increase demand for gold.
Rising Dollar and Treasury Yields
Despite the rise in gold prices, both the US dollar and Treasury yields have strengthened, which typically act as headwinds for gold. With traders scaling back expectations for Fed rate cuts in the first half of 2025, the US dollar is set to notch its sixth consecutive weekly gain. Ten-year yields are also near the highest levels seen since April.
Kaynat Chainwala, an analyst at Kotak Securities, noted that the rally in gold persists despite these rising global yields. Traders are concerned about the resurgence of inflation driven by stimulus measures, fiscal reforms, and trade tariffs.
Current Market Conditions
As of 6:51 a.m. in London, spot gold rose 0.4% to $2,677.79 an ounce. Silver traded above $30 an ounce and was on track for a second weekly gain, while palladium climbed, and platinum remained steady.
Conclusion
Gold’s continued rise reflects investor sentiment amid global uncertainty and the ongoing strength in the US dollar and Treasury yields. As traders await US payrolls data and the potential for future inflationary pressures, gold is positioned to remain a key asset for those seeking refuge in uncertain times.