Gold Hits Over One-Month High as US Data Weakens Yields

Gold Hits Over One-Month High as US Data Weakens Yields

Gold prices climbed to a high not seen in over a month on Thursday, as recent U.S. economic data further pressured Treasury yields after a weak core inflation report this week raised expectations for a more lenient Federal Reserve approach.
As of 11:20 a.m. ET (1620 GMT), spot gold rose by 0.9% to $2,719.49 per ounce, marking its peak since December 12. The price reached a record high of $2,790.15 on October 31, 2024.
U.S. gold futures increased by 1.3%, reaching $2,752.80.
The Labor Department reported on Thursday that initial claims for state unemployment benefits climbed to a seasonally adjusted 217,000 for the week ending January 11, surpassing the Reuters poll prediction of 210,000 claims.

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“The higher-than-expected initial jobless claims indicate some deterioration in the labor market,” stated Alex Ebkarian, chief operating officer at Allegiance Gold.
“We also observed a decline in U.S. Treasury yields, which has rekindled interest in gold.”
U.S. Treasury yields mitigated gains and were hovering near a one-week low following the release of retail sales, jobless claims, and import prices data.
Gold prices continued their upward trend on Wednesday following data that revealed core U.S. inflation rose by 0.2% in December after a consistent 0.3% increase over the prior four months, fueling hopes for a softer monetary policy.
Market participants now anticipate that the Fed will implement 37 basis points (bps) in rate cuts by the end of the year, an increase from the 31 bps expected before the inflation report.
Gold is regarded as a hedge against inflation; however, rising interest rates diminish the appeal of non-yielding bullion.
“Gold is likely to remain in a favorable environment as long as market participants can maintain their expectations for Fed rate cuts in 2025,” remarked Han Tan, chief market analyst at Exinity Group.

Source: Reuters