Gold prices surged to a near four-week high after a weaker-than-anticipated private employment report for December fueled expectations that the U.S. Federal Reserve might be less cautious about easing rates this year.
Gold prices climbed to a near four-week high on Wednesday, fueled by a weaker-than-anticipated private employment report for December. The report eased some market anxieties about the U.S. Fed eral Reserve's cautious stance on easing rates this year. Spot gold surged 0.5% to $2,663.79 per ounce by 9:55 a.m. ET (1455 GMT), reaching its highest point since December 13. U.S. gold futures also gained 0.5% to $2,679.70.
Bart Melek, head of commodity strategies at TD Securities, attributed gold's upward movement to the weaker private payrolls data, which suggests a less robust economy than initially projected. The ADP National Employment Report revealed that the U.S. economy added only 122,000 private sector jobs last month, falling short of economists' expectations of a 140,000 increase. A separate Labor Department report showed jobless claims at 201,000 for the previous week, below estimates of 218,000. Melek cautioned that the upcoming U.S. nonfarm payrolls report on Friday, with market expectations of a 163,000 increase, will be a key indicator. Any significant deviation from this projection could negatively impact gold prices. Investors are also awaiting the minutes from the Fed's December meeting later in the day and the U.S. nonfarm payrolls report on Friday. Tai Wong, an independent metals trader, believes the minutes will have limited impact due to the uncertainty surrounding the new administration's policies and the Fed's clear indication last month of moving into a more moderated phase of easing. Gold's performance has been influenced by the possibility of proposed Trump tariffs reigniting U.S. inflation, potentially limiting the Fed's ability to cut rates and putting pressure on gold prices. However, Fed governor Christopher Waller expressed confidence that inflation will continue to decline in 2025, allowing the central bank to further reduce interest rates, albeit at an uncertain pace. Spot silver rose 0.7% to $30.20 per ounce, while platinum fell 0.2% to $948.58 and palladium lost 0.9% to $917.65
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