Gold price today, gold rate is currently on a higher trajectory even as gold price will be impacted by Donald Trump's Inauguration day 2025.
Gold (XAU/USD) experienced a notable increase of 0.74%, driven by the uncertainty surrounding the upcoming policies of the Donald Trump administration. This rise in gold prices occurred despite stronger-than-expected US labor data, which typically would suggest reduced demand for safe-haven assets. The prevailing sentiment, however, indicates that the Federal Reserve (Fed) may not implement significant interest rate cuts this year, thus enhancing gold's appeal as a secure investment.
Gold's price initially dipped to around $2,663 following the release of the nonfarm payroll (NFP) report, which indicated that 256,000 jobs were added in December—significantly exceeding the expected increase of 160,000. The unemployment rate remained steady at 4.1%, slightly below the anticipated 4.2%. This robust labor market data led traders to adjust their expectations regarding the Fed's monetary policy, now forecasting only a 27 basis-point (bps) reduction in interest rates for the year, down from the previous estimate of approximately 45 bps
Despite this initial dip, XAU/USD quickly rebounded, reaching its highest level since December 12, indicating a potential weekly increase of more than 1.7%. Tai Wong, an independent metals trader, noted that the price movement reflects a lack of sellers willing to part with the metal, a sentiment reinforced by the significant rise in gold prices over the past year
Gold's ability to maintain its value in the face of strong employment data can be attributed to the uncertainty surrounding President-elect Trump's upcoming inauguration. David Meger, Director of Metals Trading at High Ridge Futures, explained that as the inauguration date of January 20 approaches, investors are increasingly concerned about Trump's plans to impose tariffs on a wide range of imports. Such policies could lead to inflationary pressures and restrict the Fed's ability to lower interest rates
During the Asian and early European trading hours, XAU/USD traded sideways, with no major market-moving events anticipated for the day. Analysts suggest that spot gold may retest resistance at $2,700 per ounce. A breakout above this level could pave the way for further gains in the $2,707 to $2,715 range, according to Reuters analyst Wang Tao
Euro Faces Pressure from Diverging Monetary Policies
The euro (EUR/USD) fell by 0.52% against the US dollar on Friday, closing at a 26-month low. This decline followed the release of a stronger-than-expected US nonfarm payroll report, which caused US Treasury yields and the dollar to rise. The robust job growth, with the unemployment rate dipping to 4.1%, signaled a healthy labor market, prompting traders to adjust their expectations for interest rate cuts by the Fed
Concerns about Trump's proposed import tariffs, tax cuts, and immigration restrictions further fueled inflation fears, leading to a less aggressive easing cycle from the Fed. Currently, the market is pricing in a nearly 70% chance that the US base rate will remain unchanged through May 2025, with just under a 50% probability for a 25-bps rate cut in June
In contrast, traders have a markedly different outlook for the European Central Bank (ECB), anticipating at least two additional 25-bps rate cuts by mid-April 2025. This significant divergence in monetary policy expectations is putting downward pressure on the EUR/USD pair. Despite a 9% decline since the end of September 2024, some traders believe the euro may be undervalued in the short term.
Meanwhile, the USD/JPY pair declined by 0.25%, while the US Dollar Index (DXY) surged following the release of the nonfarm payroll report. The data revealed a stronger-than-expected job addition, reinforcing perceptions of a less dovish monetary policy from the Fed
The US dollar rose after the Department of Labor reported that the economy added 256,000 new jobs in December, significantly exceeding the forecast of 160,000. Strong employment metrics suggest that the Fed may not need to reduce interest rates aggressively. Jane Foley, Chief FX Strategist at Rabobank, indicated that the Fed is likely to implement only one rate cut this year
However, if President Trump's economic policies are enacted promptly, the possibility of interest rate reductions could diminish. Trump's campaign suggested an agenda that included tariffs, tax cuts, and stricter immigration policies, all of which could contribute to rising inflation
The University of Michigan's consumer sentiment survey also revealed increased inflation expectations, further strengthening the US dollar. January's one-year inflation expectations rose to 3.3%, the highest level since May, up from 2.8% in December. Following this data, the market began to anticipate a pause in the easing cycle during the January meeting, with analysts now projecting only a 27-bps reduction in interest rates for 2025, likely occurring at the June meeting
As gold prices rise ahead of Donald Trump's inauguration, the interplay of economic data and geopolitical uncertainty is shaping market dynamics. The anticipation of potential policy changes under the new administration is driving investors toward safe-haven assets like gold, while divergent monetary policies are influencing currency movements. With traders eyeing key resistance and support levels, the coming days will likely be critical for market participants as they navigate these evolving conditions.
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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.
