Gold prices rose slightly during trading on Friday amid uncertainty over US President-elect Donald Trump’s economic policies. This volatility in US politics has boosted demand for gold as a safe-haven asset. At the same time, investors are awaiting the US non-farm payrolls report to see the path of the Federal Reserve’s interest rate cut policy.
Job Report Expectations
The non-farm payrolls report will likely release at 16:30 Riyadh time. The report is expected to show that employers added 164,000 new jobs in December, down from 227,000 in November. If the report comes out higher than expected, gold could come under selling pressure, leading to a slight decline in its prices.
Jigar Trivedi, senior analyst at Reliance Securities, added that “gold could see a slight decline if the non-farm payrolls numbers are higher than expected.” Investors are closely watching the data, which indicates a strong labor market that could support the Fed’s decision not to cut rates in the coming months.
The Fed’s Role in Economic Action
Kansas City Fed President Jeff Schmidt indicated he was reluctant to cut interest rates again given the strength of the U.S. economy and the continued inflation rate above the Fed’s 2% target. This reflects the growing challenges facing investors, as Trump’s trade policies, such as tariffs, and immigration measures could prolong the battle against inflation. These increases come at a sensitive time for investors who closely follow developments in the labor market and interest rates
All these metals are heading towards weekly gains, which reflects the moderate optimism in the market.
Gold as a Hedge Against Inflation
Investors consider gold an asset that protects against the effects of inflation, as it remains a safe haven for those looking to preserve the value of their money during times of economic instability. However, rising interest rates continue to reduce the attractiveness of gold, as investors turn to assets that generate higher returns. In this context, analysts indicate that investors are awaiting the signals that the Federal Reserve will provide regarding the possibility of cutting interest rates.
Gold prices in recent days
Gold prices witnessed an increase in trading on Thursday, as they achieved significant gains driven by the decline in US Treasury bond yields. After analyzing economic data, analysts found that monetary tightening negatively affected the US labor market, which boosted demand for gold. At the close of trading on Thursday, gold futures for February delivery recorded a rise of 0.7% to reach $2,690.80 per ounce, after touching $2,696.80, the highest level since mid-December.
Gold and Dollar Fluctuations
Meanwhile, spot gold rose 0.3% to $2,679 per ounce, adding more than 1% this week. This is on track to be the best weekly gain for gold since mid-November. On the other hand, the dollar index futures fell slightly by 0.03% to 108.97 points, reflecting a slight weakness in the US currency against gold.
Developments in other metals
Gains were not limited to gold alone, but extended to some other metals. For example, spot silver rose by 0.3% to $30.2 per ounce, while silver futures recorded $31.17 per ounce. Both metals are close to their monthly highs. In contrast, platinum fell by 0.4% to $955.97, while palladium rose by 0.9% to $934.16.
Impact of global economic conditions on gold
Many analysts expect gold to continue to be affected by the volatility of global financial markets. With the ongoing uncertainty over economic policies in the United States and rising concerns about global inflation, the demand for gold may continue to increase. Despite the pressures of high interest rates, the state of financial markets remains risky. This makes gold one of the preferred options for investors seeking to protect their money in these difficult times.
Gold Outlook
Next Week Forecast
One of the most important factors that could affect gold prices next week is the US jobs report, which analysts expect to release at the beginning of the week. If the data shows a positive result, it could lead to a rise in the dollar and a decrease in demand for gold. However, if the data comes out weaker than expected, it could enhance the appeal of gold as a safe haven. With the improving economic outlook, gold may face pressure in the coming days, but the stability of stock markets and other instruments may restore support for the yellow metal.
Gold remains between optimism and caution, as investors await the upcoming US jobs report. With the current economic challenges and political pressures, investors should be cautious in their dealings with gold, while market volatility may contribute to strengthening the yellow metal’s position as a hedge against future economic risks
