Gold prices saw significant volatility on Thursday, after hitting their highest levels in nearly four weeks in the previous session. Profit-taking contributed to the volatility, at a time when the focus was on the upcoming jobs report on Friday, which is expected to provide clues about the path of interest rates for 2025 by the US Federal Reserve.
A market strategist confirmed that “prices are moving within a narrow range and there is profit-taking currently taking place.” Kedia added, “The market needs a new catalyst for gold to break through its current resistance.”
In the previous session, gold reached its highest level in nearly four weeks, supported by a weaker-than-expected report on employment in the US private sector. The report showed that the labor market is facing a slowdown, which indicates that the Federal Reserve may be less cautious about cutting interest rates anytime soon.
As the market awaits the US jobs report, investors are looking forward to what this data will bring. This report should provide additional information about the future monetary policy of the Federal Reserve. These developments come at a sensitive time, as global markets await Donald Trump’s inauguration on January 20, amid expectations that his protectionist and tariff policies may contribute to increasing inflation.
It is clear that inflation fluctuations and the Federal Reserve’s decisions on interest rates will be the main factors that will determine the future path of gold prices. At the same time, markets will remain under the influence of global and local economic factors, including trade and immigration policies, which may directly affect the attractiveness of gold as a hedge against inflation.
Although the bullish momentum in gold may continue to push it higher in the near term and early 2025, a combination of physical.
Analysis of the minutes of the Federal Reserve’s last meeting and its implications for XAU
The minutes of the last Federal Reserve meeting, published on Wednesday, showed that Fed policymakers indicated that economic conditions may take longer to regulate and adjust than previously expected. They stated that “recent higher-than-expected inflation readings, along with the effects of potential changes in trade and immigration policies, suggest that this process may take longer than previously anticipated.”
This statement indicates that the Fed sees the current economic situation as requiring close monitoring, especially with regard to inflation rates, which have remained elevated compared to previous expectations. The impact of potential changes in trade and immigration policies may also contribute to complicating the process of making monetary policy decisions. Therefore, Fed policymakers remain cautious about any steps they may take in the near future. In this context, gold is considered one of the assets that are resorted to during times of inflation as a means of hedging against the erosion of the purchasing power of currencies.
Historically, gold has been viewed as a safe haven for investors seeking to preserve their money in the face of market volatility and rising prices. However, analysts point out that the rise in interest rates by the Federal Reserve reduces the attractiveness of gold as a hedge against inflation. This is because higher interest rates make assets that offer fixed returns, such as bonds, more attractive compared to gold that does not provide returns. In this context, HSBC stated in a note that “the bulk of the rise in gold prices has already been realized.” The bank added that although the upward momentum in gold may continue to push the precious metal higher in the near term and early 2025, there are economic and financial factors that may limit this rise in the future. HSBC believes that a combination of physical factors.
Current gold and dollar prices
In a recent report, the World Gold Council noted a positive inflow of gold-backed exchange-traded funds for the first time in four years. This development may reflect a renewed interest in gold and increased demand for the precious metal in global markets. It seems that this improvement may be the result of a number of economic and financial factors that are currently affecting the market.
As for gold prices, they have witnessed slight movements during the recent period. The spot price of gold rose by 0.16% to reach $2,666 per ounce. Gold futures also recorded a 0.4% increase, recording $2,683 per ounce. These slight increases come at a time when investors are awaiting market movements based on economic data coming from the United States.
On the other hand, the dollar index witnessed a 0.1% increase to reach 109.04 points. This increase reflects a state of relative stability in the strength of the US dollar compared to other currencies, at a time when Federal Reserve continues to maintain effective monetary policies in global markets.
As for other metals, spot silver rose slightly by 0.1% to $30.16 per ounce. In contrast, platinum fell by 0.5% to $951.23 per ounce, and palladium also fell by 0.5% to $924.04. These changes indicate the volatility witnessed by precious metals markets, as traders await further economic developments.
It is worth noting that global markets are anticipating significant fluctuations in gold prices in the coming days, with the flow of important economic data such as the US jobs report. This data may play a major role in determining the future trends of gold prices, especially in light of expectations of potential impacts from Federal Reserve’s monetary policies. In addition, the global political situation, including economic, remains one of the main factors that may directly affect price movement.
