Gold prices saw a resurgence on Friday as concerns over the incoming Trump administration’s policies boosted the metal’s appeal as a safe-haven investment. This was in spite of stronger-than-expected U.S. employment data, which reinforced expectations that the Federal Reserve might not cut interest rates as aggressively this year. Spot gold increased by 0.5% to $2,688.40 per ounce, while U.S. gold futures rose by 1% to $2,717.60.
Although gold prices briefly dipped to $2,663.09 an ounce following data that revealed the U.S. added 256,000 jobs last month—far surpassing economists’ estimate of 160,000—they quickly rebounded. The unemployment rate was reported at 4.1%, slightly lower than the forecasted 4.2%. The strong performance led to gold trading near its highest levels since December 13, positioning it for a weekly gain of more than 1%.
Gold’s resurgence amid Trump concerns
“Gold’s price action points to a lack of committed sellers of the metal; a diffidence well-learned from last year’s remarkable rise,” said Tai Wong, an independent metals trader. “The momentum from the knee-jerk reaction faded quickly and the short-term traders and programs that sold reversed quickly.”
Following the jobs data, the dollar rallied while U.S. stock futures fell sharply.
Market expectations showed traders now anticipate the Fed to cut interest rates by just 30 basis points this year, down from previous expectations of 45 basis points. David Meger, director of metals trading at High Ridge Futures, commented, “Gold is still acting resilient in the face of a much stronger-than-expected jobs report. One of the factors supporting gold is the uncertainty surrounding the U.S. presidential inauguration.”
As President-elect Donald Trump’s January 20 inauguration approaches, investors are wary of his plans to impose tariffs on a wide range of imports, fearing these could spur inflation and hinder the Fed’s ability to lower rates.
While bullion is valued as a hedge against inflation, high interest rates tend to diminish its allure as a non-yielding asset.