Gold prices rose on Thursday after hitting a near four-week high in the last session as focus shifted to the U.S. jobs report due on Friday for additional insight into the Federal Reserve’s interest rate trajectory this year.
In the UAE, gold rates lost AED0.25, with 24-carat gold declining to AED322 and 22-carat gold falling to AED298. Meanwhile, 21-carat gold dipped to AED288.5 and 18-carat gold reached AED247.25.
Globally, spot gold gained 0.11 percent to $2,659.18 as of 6:11 GMT. Meanwhile, U.S. gold futures rose 0.15 percent to $2,676.41.
The U.S. dollar index held steady at 109.09, nearing the two-year high it touched last week and impacting the attractiveness of bullion for other currency holders.
Fed sees labor market conditions easing
Gold prices have remained in a narrow range recently due to the lack of new supportive factors. Bullion hit almost a four-week high in the previous session after a weaker-than-expected U.S. private employment report hinted at the possibility that the Fed may be less cautious about easing rates this year. The Automatic Data Processing report revealed that private sector payrolls rose by 122,000 in December, well below November’s increase of 146,000 and missing expectations of 140,000.
A separate Labor Department report showed that initial jobless claims stood at 201,000 in the week ending January 4, marking the lowest reading since February 2024 and pointing to a stable labor market.
Meanwhile, another set of data on Tuesday revealed that U.S. job openings unexpectedly increased in November but hiring slowed, suggesting that the labor market continued to soften at a pace that does not require the Fed to cut interest rates immediately.
The market now awaits the U.S. nonfarm payrolls report on Friday for more clues on the Fed’s policy outlook for the year and its impact on gold prices. Bullion is considered a hedge against inflation, but higher interest rates reduce the non-yielding asset’s appeal.
Minutes of the Fed’s December FOMC meeting showed that policymakers viewed labor market conditions as gradually easing and were in favor of slowing the pace of rate cuts amid stalling disinflation. They also noted the impact of potential changes in trade and immigration policy, suggesting that the process of lowering inflation could take longer than previously anticipated.
Trump to take office in 11 days
Investors are also waiting for Donald Trump to take office on January 20. Earlier this week, Trump denied news that his administration will pursue a less aggressive tariff policy and target certain sectors critical to U.S. national or economic security.
Trump’s proposed tariffs and protectionist policies are expected to accelerate inflation and disrupt global trade, offering support to safe-haven assets like gold. However, these policies could also prompt the Fed to take a more cautious stance on rate cuts, limiting an upside in gold prices.
Trump also hinted at the possibility of escalating geopolitical tensions in the Middle East once he takes office, which will likely further raise safe-haven demand for gold. Geopolitical tensions have been a major factor in gold’s surge in 2024 and are likely to continue to provide support in 2025. Risks stemming from the Russia-Ukraine war and tensions in the Middle East continue to drive flows toward the precious metal.
Elsewhere, China, the world’s top consumer of gold, increased its gold reserves in December for the second month in a row, according to official data from the People’s Bank of China. In addition, the World Gold Council said that physically-backed gold exchange-traded funds (ETFs) registered their first inflow in four years.
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Other precious metals
The precious metals market witnessed mixed movement as gold prices rose on Thursday. Spot silver gained 0.11 percent to $30.15 per ounce while platinum fell 0.49 percent to $950.95 and palladium dipped 0.51 percent to $923.78.
