Today's Gold Performance: Gold Pulled Back Amid Investor Concerns and Anti-risk Sentiment

 

Gold retreated from its Wednesday’s high during trading hours on Thursday (Jan. 9) as a weaker-than-expected December private employment report relieved investors. Reports of Trump's tariffs also provided support for gold as a safe-have. However, higher US Treasury Yield and rising the dollar index concerned gold investors. Gold prices retreated to near the $2650 mark after rising to $2669.

 

 

Bart Melek, head of commodities strategy at TD Securities, said weak private employment data that indicated economic slowdown caused gold volatility.

 

ADP National Employment Report (commonly known as nonfarm private sector employment) showed that the US added 122,000 private jobs in December, lower than the expected 140,000 increase. Another report from the Labor Department showed that initial last-week jobless claims were 201,000, down from the expected 218,000.

 

Melek said Friday's U.S. nonfarm payrolls would affect gold more. Any figure higher than the expected 163,000 will harm gold.

 

The U.S. 10-year treasury yield hit an eight-month high on Wednesday amid concerns that Trump's policies could reignite inflation while boosting economic growth, leading to fewer Fed rate cuts.

 

Michael Lorizio, head of U.S. interest rate trading at Manulife Investment Management, said that when Trump took office, people worried that inflation would rise in the first quarter. Lorizio analyzed that considerable uncertainty about Trump’s policies and their consequences made investors wary of buying longer-dated bonds.

 

The dollar index once rose 0.62% to $109.37 in Wednesday's session, nearing last week's more-than-two-year high of 109.54. The rising dollar supported the safe-haven, gold.

 

The Fed Minutes released on Wednesday showed that Fed officials agreed that inflation would lower in 2025. However, Trump's policies elevated the risk of continued price increases.

 

Investors are polarized on whether Trump's policies will accelerate or decelerate economic growth. For now, they believe the Fed will cut rates by 0.39% in 2025. They expect Friday's non-farm payrolls data to add 160,000 jobs in December.

 

Technically, the daily level of gold prices has stabilized the middle Bollinger Band, MACD, and KDJ gold cross. Short-term opportunities are biased towards the long positions, on track to rise further to the upper Bollinger Bands near the 2700 mark.

 

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