Gold price today, gold has been facing significant challenges recently due to a combination of factors, including a sell-off in precious metals, the strengthening of the US dollar, and Trump policies uncertainty.
Gold (XAU/USD) experienced a decline of over 1% on Monday, primarily influenced by a strengthening US dollar (USD). The dollar approached a two-year high following a strong jobs report from Friday, which heightened expectations for a cautious approach to interest rate cuts by the Federal Reserve (Fed) later this year.
The recent US job report exceeded expectations, bolstering the US dollar and Treasury yields. Bob Haberkorn, senior market strategist at RJO Futures, noted that gold's decrease is a continuation of the response to the robust jobs data: "Gold's move lower here is some follow-through on the stronger-than-expected report." Additionally, some gold bulls may have liquidated their long positions, contributing to the technical decline in prices.
Despite the current pressure, XAU/USD remains under bullish influence due to uncertainty surrounding the incoming policies of Donald Trump. His proposed trade tariffs and immigration policies are expected to be inflationary and could potentially ignite trade wars, enhancing gold's appeal as a safe-haven asset.
During the Asian and early European trading sessions, XAU/USD showed signs of recovery. Traders are now looking ahead to the US Producer Price Index (PPI) report, set to be released at 1:30 p.m. UTC, along with speeches from Fed officials. Analysts forecast a 0.3% rise in monthly core PPI and a 3.8% annual increase. Should the actual figures exceed expectations, XAU/USD might retreat towards the $2,635 level. Conversely, weaker-than-expected results could lift the pair above $2,700.
Reuters analyst Wang Tao commented, "Spot gold may fall towards $2,635 per ounce, a level pointed by a rising channel."
The euro (EUR/USD) briefly fell below the 1.01800 level but managed to recover most of its losses, finishing the day nearly unchanged from Friday. However, the EUR/USD pair remains under bearish pressure due to differing monetary policy expectations between the European Central Bank (ECB) and the Federal Reserve.
The US economy's stronger performance compared to the eurozone, which faces sluggish growth and challenges such as energy dependence and geopolitical instability, contributes to this divergence. A better-than-expected US nonfarm payroll (NFP) report has prompted traders to reassess their expectations for US rate cuts in 2025. With President-elect Donald Trump returning to the White House, analysts anticipate his policies will stimulate growth and exacerbate inflationary pressures.
ING strategists noted, "The combination of a stronger US dollar and higher Treasury yields is crowding out financial flows to the rest of the world." They expect the dollar to remain strong throughout the year, reminiscent of the tariff era of 2018–2019.
Today's focus will also be on the US PPI report and speeches from Fed officials. If the PPI indicates higher-than-expected figures, EUR/USD could drop towards the 1.01550 level, while lower-than-expected results might push the pair above 1.03000.
On Monday, the British pound (GBP/USD) continued its downward trend against the US dollar, driven by concerns over the UK's fiscal sustainability. Gilt yields rose for the sixth consecutive day, although GBP managed to recover slightly in the afternoon, closing just above the crucial support level of 1.22000.
UK Prime Minister Keir Starmer reaffirmed the government's commitment to the fiscal guidelines outlined in the October budget by Finance Minister Rachel Reeves. However, the market reacted minimally to his comments. The narrow margin for balancing public spending and tax revenue by the end of the decade poses challenges, especially as borrowing costs rise and UK economic growth slows.
The market is now turning its attention to upcoming British inflation data, with the Consumer Price Index (CPI) projected to rise by 2.6% annually in December. Core CPI is expected to slow to 3.4%, down from 3.5% in November.
The British pound has become a target for global currency traders, influenced by rising bond yields. This trend originated from the US as concerns about inflation and reduced likelihood of Fed rate cuts gained traction. Strong US employment data has fueled a rise in global bond yields, affecting GBP outlook.
As GBP/USD fluctuated slightly above the 1.22000 support level during Asian and European trading hours, today's PPI report will be crucial. A higher-than-expected reading could exert downward pressure on GBP/USD, while softer data might allow it to regain some momentum.
In conclusion, gold is navigating through a complex landscape of technical sell-offs and policy uncertainties, while the euro and British pound also face their own challenges in the current economic climate. Traders are closely monitoring upcoming economic indicators to inform their strategies moving forward.
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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.
