Gold prices are low; Slow US jobs data boosts the dollar, dampening expectations for a rate cut
Gold prices fell slightly on January 13, 2025, following a strong US jobs report that strengthened the Federal Reserve’s cautious approach to rate cuts. The report supported the strength of the US dollar, making gold more expensive for foreign buyers.
Strong US jobs are reportedly depressing gold prices
Local gold fell 0.2 percent to $2,684.39 an ounce, while US gold futures lost 0.1 percent, to $2,712. Unexpectedly strong US nonfarm payrolls data for December showed that the US economy remains strong, reinforcing expectations that the Federal Reserve will not rush to ease policies. The report fueled investor confidence in the dollar, which in turn put pressure on gold prices.
The rising dollar and the Fed’s cautious stance
A rising dollar made gold more expensive for buyers using other currencies. Additionally, the Federal Reserve’s cautious view on rate cuts, further bolstered by the recovery narrative of the US economy, took away some of the appeal of gold. Higher interest rates tend to reduce the attractiveness of non-yielding assets like gold, as investors seek returns elsewhere.
Market expectations for future rate cuts
Traders now expect the Federal Reserve to hold rates steady during its next meeting in January. In addition, market participants only predict a single rate cut in 2025, with expectations pointing to June as the most likely month. However, all eyes are now on the upcoming US inflation data, due out later this week. Weak inflation data may reverse the dollar’s rally against currencies, offering fresh hope for a rate cut.
Silver and other precious metals are also facing downward pressure
Silver prices also fell, falling 0.6 percent to $30.21 an ounce. Platinum fell 0.4 percent to $960.54, while palladium remained steady at $947.40.
An overview of the gold and silver market
The recent dip in gold reflects the current uncertainty surrounding US economic policies and their potential impact on the precious metal market. As markets continue to monitor US economic data and Federal Reserve comments, both gold and silver remain under pressure in the short term.
Current precious metal prices:
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Gold (Feb 5, 2025): Rs 78,700.00, up by Rs 277 (0.35 percent)
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Silver (Mar 5, 2025): Rs 92,394.00, down by Rs 112 (-0.12 per cent)