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Gold Shines Amid Market Uncertainty as Fed Rate Cut Hopes Dim

11 Jan 2025 8:38 am
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MUMBAI, 11 Jan (Commoditiescontrol): Gold prices rebounded on Friday, driven by investor caution over the incoming Trump administration’s policies and its potential impact on the global economy. Despite strong U.S. employment data that dampened expectations of aggressive interest rate cuts by the Federal Reserve, gold retained its safe-haven appeal.

Spot gold rose 0.6% to $2,685.38 per ounce, while U.S. gold futures climbed 1.3% to $2,726.10. Earlier in the session, gold briefly dipped to $2,663.09 after the release of data showing the U.S. added 256,000 jobs in December, far exceeding economists’ expectations of 160,000. The unemployment rate edged lower to 4.1%, compared to the forecast of 4.2%.

The robust employment data initially weighed on gold prices but failed to derail their upward momentum. By the end of the session, bullion was trading near its highest levels since December 13 and is on track to post a weekly gain of over 1%.

The dollar strengthened following the jobs report, while U.S. stock futures experienced a sharp decline. Market sentiment shifted, with traders now predicting the Federal Reserve will cut interest rates by only 30 basis points this year, down from earlier expectations of 45 basis points.

Investor uncertainty also stems from President-elect Donald Trump’s impending inauguration on January 20. His pledges to impose tariffs on various imports have raised concerns about inflation, which could complicate the Fed’s decision-making on interest rates. While gold is traditionally seen as a hedge against inflation, its appeal is tempered by higher interest rates, which increase the opportunity cost of holding the non-yielding asset.

Other precious metals also recorded gains. Spot silver rose 1% to $30.43 per ounce, platinum firmed 0.7% to $964.90, and palladium surged 2.5% to $949.25. All three metals were on course for weekly gains, reflecting broad strength across the precious metals market.

As markets brace for the economic and policy shifts under the Trump administration, gold’s role as a safe-haven asset appears poised to remain in focus. Investors will continue to monitor geopolitical developments and central bank actions for further direction.

(By Commoditiescontrol Bureau; +91 98201 30172)


       
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