At 11:12 GMT, XAU/USD is trading $2651.77, up $3.145 or +0.125%.
Trump rate risks support gold as traders hedge against inflation
Gold’s strength is also supported by risks arising from newly elected President Donald Trump’s proposed tariff policies. With Trump set to take office on January 20, concerns about potential trade wars and inflationary pressures have investors seeking safety in gold. Tariffs and protectionist measures are seen as inflationary, strengthening gold’s appeal as an inflation hedge.
While inflationary pressures support gold, higher interest rates tend to reduce its attractiveness. This balancing act places more weight on economic data that could shape the Fed’s policy outlook. Traders are primarily focused on ADP’s employment report and unemployment claims, while Friday’s nonfarm payrolls report will add further clarity.
Labor data and Fed minutes to boost sentiment
At 13:15 GMT, the ADP Non-Farm Employment report is expected to show 139,000 new private sector jobs, down slightly from 146,000 in November. Jobless claims, payable at 1330 GMT, are forecast at 214,000. Any surprises could change interest rate cut expectations for 2025.
Tuesday’s data showed that while job openings rose in November, hiring slowed, indicating the labor market was cooling. Softer labor data this week could fuel optimism for more aggressive Fed easing, pushing gold prices higher. Conversely, stronger-than-expected results could delay rate cuts, putting pressure on gold.
Markets react as government bond yields rise and stocks fall
Recent market movements highlight gold’s sensitivity to macroeconomic data. Tuesday’s stronger-than-expected JOLTs report and ISM services data sparked a sell-off in stocks, with the Nasdaq down nearly 2% and Treasury yields rising. The ten-year yield rose to 4.699%, the highest level in eight months.