Forex.com’s Fawad Razaqzada stated that gold's response to CPI data is limited unless inflation surprises to the upside, which could dampen expectations for further rate cuts. The market sees an 86% chance of a 25-basis-point Fed rate cut in December.

Gold is favored as a safe investment during economic and geopolitical uncertainty, benefiting from low or falling interest rates. China’s plans for more accommodative policies next year could also boost demand for gold, particularly ahead of the Lunar New Year.

Gold Prices Surge on Geopolitical Tensions and Rate Cut Expectations

On Monday (Dec 2), gold prices hit a two-week high, rising over 1%. This increase was driven by China's central bank resuming gold purchases after a six-month pause, as well as growing market expectations of a rate cut by the Federal Reserve next week, which boosted bullish sentiment. Strong central bank buying has been one of the key factors supporting gold's price surge this year, alongside loose monetary policies and geopolitical tensions.

Gold Prices Hit Two-Week High Driven by China's Resumed Gold Purchases and Fed Rate Cut Expectations

The U.S. added 227,000 jobs in November, beating expectations and prompting upward revisions for the previous two months. Despite this, the overall labor market remains stable and easing, which supports the view that the Federal Reserve may cut interest rates again in December. After the report was released, the U.S. dollar and Treasury yields dropped. Analysts expect an 87% chance of a 25 basis point rate cut in December, which has been a key factor driving gold's strong performance this year. The data is seen as "Goldilocks" — not too strong or weak — allowing the Fed to continue easing.

U.S. Non-Farm Payrolls Beat Expectations, Boosting Odds of Fed Rate Cut and Supporting Gold

The decline in gold prices is due to the U.S. releasing data on initial unemployment claims from the previous week, which led to a rise in U.S. Treasury yields. At the same time, the market is awaiting the U.S. non-farm payroll data to gauge the Federal Reserve's latest stance on interest rate cuts.

David Meger, Director of Metals Trading at High Ridge, stated that gold is currently in a stagnation period, with only some range-bound activity. The market is waiting for the next set of data or a new catalyst to drive gold prices out of this range.

Gold Prices Drop as U.S. Unemployment Data Rise; Market Awaits Non-Farm Payroll Report

The ADP report revealed a gain of 146,000 private sector jobs in November, below the 150,000 forecast. Investors are awaiting Friday's non-farm payroll data and next week's inflation figures to gauge the Fed's next steps on interest rates.

Gold is also supported by global geopolitical tensions, including instability in South Korea, France, and ongoing conflicts in Ukraine and Israel. The Fed's potential rate cuts are seen as favorable for gold, which performs better in low-interest-rate environments.

Gold Prices Edge Up Amid Mixed U.S. Jobs Data and Geopolitical Tensions

Gold prices could rise to $2,750 per ounce by the end of 2025 due to a recovery in China's gold demand and central bank purchases, despite a stronger US dollar. Recent declines in gold prices were influenced by a post-election dollar rebound and the Israel-Hezbollah ceasefire. Factors such as China's economic slowdown and ongoing issues in its real estate sector could boost gold demand

Gold Price could reach $2,750, driven by China’s Demand and Central Bank Purchases

Gold priced in US dollars rebounded from a 1.0% drop on Monday, approaching one-week highs in euro terms. This came after France's borrowing costs surpassed Greece's for the first time, amid a likely 'no confidence' vote triggered by far-right leader Marine Le Pen over the government's deficit spending plans.

France's Borrowing Costs Surge Above Greece's Amid Political Uncertainty

Gold prices (XAU/USD) are under pressure in early European trading, currently hovering around $2,629, marking the first decline in five days. This drop is driven by several factors, including growing concerns that US President-elect Donald Trump's tariff plans could stoke inflation and limit the Federal Reserve's ability to cut interest rates. This expectation has led to a rise in US Treasury bond yields, diverting investor interest away from gold.

Gold Faces Pressure as US Tariff Concerns and Rising Bond Yields Weigh on Prices

On Friday, during the Asian market's early trading session, gold prices slightly rose and traded in a narrow range on Thursday. Despite a rebound in the US dollar, geopolitical uncertainties and concerns over the trade war boosted demand for safe-haven assets. Due to the US market being closed, trading in the gold market was quiet.

The US president-elect, Donald Trump, plans to impose tariffs on Canada and Mexico, raising concerns about potential reactions from these two countries, which has become an important support factor for gold.

Tariffs on Canada and Mexico, an important support factor for gold.

Gold (XAU/USD) recovers from an intraday dip to $2,620, but lacks strong bullish momentum as concerns over US President-elect Trump's tariff plans and the Russia-Ukraine conflict support demand for safe-haven assets. Meanwhile, expectations of slower Fed rate cuts, fueled by positive US data, boost Treasury yields and the USD, limiting gold's upside. A positive risk tone and thin trading volumes due to a US holiday also weigh on gold's price action.

Gold price bulls are staying on the sidelines due to a stronger USD and a positive risk sentiment.

On Wednesday, Gold (XAU/USD) rebounds to the $2,650s as traders react positively to the ceasefire deal between Israel and Hezbollah, following heavy selling on Monday. While the 60-day ceasefire is holding, some remain skeptical without a resolution in Gaza, according to Bloomberg.

Additionally, gold may benefit from safe-haven demand amid other geopolitical risks, with reports from Ukraine highlighting increased instability on the frontlines, as noted by UK Defence Secretary John Healy.

Gold rises as traders “buy the fact” after news of Lebanon ceasefire

Israel may be days away from a cease-fire with Lebanon’s Hezbollah, according to the Israeli ambassador to the US. Prices fell after Axios reported that both Israel and Lebanon have agreed to the terms of a cease-fire, though no official announcement has been made.

Bart Melek, global head of commodity strategy at TD Securities, noted, “When risk drops, gold typically falls too."

Gold prices dropped by 3.7% to $2,615.58 an ounce, marking the largest intraday decline since June 7, as traders unwound positions made during last week's geopolitical tensions, which had driven gold’s biggest weekly rally in 20 months.

While gold has found support amid the ongoing Russia-Ukraine and Middle East conflicts, investors are now focusing on the Fed's potential easing policy in response to resilient economic data.

Johnny Lee

Johnny Lee

Dec 11 2024

Gold Prices Surge on Geopolitical Tensions and Rate Cut Expectations

Johnny Lee

Dec 10 2024

Gold Prices Hit Two-Week High Driven by China's Resumed Gold Purchases and Fed Rate Cut Expectations

Johnny Lee

Dec 09 2024

U.S. Non-Farm Payrolls Beat Expectations, Boosting Odds of Fed Rate Cut and Supporting Gold

Johnny Lee

Dec 06 2024

Gold Prices Drop as U.S. Unemployment Data Rise; Market Awaits Non-Farm Payroll Report

Johnny Lee

Dec 05 2024

Gold Prices Edge Up Amid Mixed U.S. Jobs Data and Geopolitical Tensions

Johnny Lee

Dec 04 2024

Gold Price could reach $2,750, driven by China’s Demand and Central Bank Purchases

Johnny Lee

Dec 03 2024

France's Borrowing Costs Surge Above Greece's Amid Political Uncertainty

Johnny Lee

Dec 02 2024

Gold Faces Pressure as US Tariff Concerns and Rising Bond Yields Weigh on Prices

Johnny Lee

Nov 29 2024

Tariffs on Canada and Mexico, an important support factor for gold.

Johnny Lee

Nov 28 2024

Gold price bulls are staying on the sidelines due to a stronger USD and a positive risk sentiment.

Johnny Lee

Nov 27 2024

Gold rises as traders “buy the fact” after news of Lebanon ceasefire

Johnny Lee

Nov 26 2024

The largest intraday decline since June 7