Gold prices retreated during the holiday-week trading session following the release of mixed US unemployment data, which offered little clarity on the Federal Reserve’s future interest rate decisions. This left existing bets on potential rate cuts largely unaffected.
The price of gold dipped 0.6% to $2,617.75 per ounce, erasing gains from the previous day. This decline followed a report showing a rise in continuing unemployment claims to a three-year high, suggesting challenges for job seekers. However, initial jobless claims saw a slight decrease, creating a mixed picture for the labor market.
Federal Reserve Chair Jerome Powell, in his remarks after the final 2024 policy meeting, reiterated the central bank’s view of a controlled cooling in the labor market. The Fed also adjusted expectations for the number of rate cuts in 2025, emphasizing the need for further evidence of easing inflation. Typically, lower interest rates bolster gold prices, as the non-interest-bearing asset becomes more attractive in a low-yield environment.
Despite the recent slowdown, gold has achieved record highs throughout the year and is poised to finish 2024 with an approximate 27% gain. This remarkable performance has been driven by factors including the Fed’s monetary easing policies, safe-haven demand amid global uncertainty, and significant purchases by central banks. However, the dollar’s strengthening in the wake of Donald Trump’s election has tempered the rally.
As of 11:12 a.m. in New York, spot gold was trading 0.6% lower at $2,617.48 an ounce. The Bloomberg Dollar Spot Index remained relatively stable. Other precious metals, including silver, platinum, and palladium, also experienced declines.
This analysis aligns with observations from other market experts who note the sensitivity of gold prices to economic data and shifts in monetary policy expectations. The mixed signals from the latest jobless claims report reinforce the uncertainty surrounding the Fed’s next moves, contributing to the recent volatility in gold prices.
