Gold prices pared their gains on Tuesday after strong US jobs data indicated a cautious approach by the US Federal Reserve towards cutting interest rates, while a weak dollar and a decline in Treasury yields limited losses as markets awaited more economic signals.
Gold rose in spot transactions by 0.2% to $2,644.05 per ounce, and prices were up by about 0.7% before the US job vacancy data, and gold futures in the United States stabilized at $2,667.90.
Analysts said, “The data confirms our expectations of a labor market recovery, which eases fears of a significant slowdown in labor markets before the non-farm payrolls report on Friday.”
A strong jobs report could prompt the Federal Reserve to take a cautious stance on cutting interest rates. Investors’ focus turns to the ADP employment report and Federal Reserve Chairman Jerome Powell’s speech tomorrow, Wednesday, ahead of Friday’s jobs report.
Traders are currently pricing in a 74% chance of a 25 basis point cut in interest rates in December.
The US 10-year Treasury yield fell to its lowest level in more than a month, and the dollar also fell 0.3%, limiting losses in bullion.
Analysts at JP Morgan and HSBC highlighted gold’s role as a hedge against geopolitical uncertainty, noting that rising global tensions and conflicts have enhanced its appeal.
They emphasized that President-elect Trump’s policies may increase geopolitical risks, which may benefit gold as a safe asset in 2025.
“The post-election selling of gold was a concentration-driven tumble, not a radical change,” JP Morgan noted, expecting prices to rise toward $3,000 an ounce in 2025 as physical demand and the concentration of less frothy futures contracts would pave the way for further price gains. In 2025.
Gold, which pays no interest, has historically performed well in low interest rate environments and during periods of geopolitical uncertainty.
The price of spot silver rose by 1.7% to $31.01 per ounce, platinum rose by 1% to $956, and palladium fell by 0.9% to $973.
