Spot gold gained 0.1% to $2,045.41 an ounce, while gold futures added 0.1% to $2,052.05 an ounce
Gold prices moved little in Asian trade on Friday after plunging below key levels this week following a sharp rebound in the dollar, with focus now on key U.S. labour market data for more cues on interest rate cuts in 2024.
The yellow metal was nursing some losses for the week after a strong melt-up towards the end of 2023. But the rally failed to continue amid profit-taking and growing uncertainty over the Federal Reserve’s plans for interest rate cuts this year.
Markets slightly scaled back bets that rate cuts could begin by March 2024, after the minutes of the Fed’s December meeting offered few hints on when the bank planned to begin cutting rates.
This trend caused sharp gains in the dollar, with the currency headed for a more than 1% weekly gain- its best since July 2023.
Spot gold gained 0.1% to $2,045.41 an ounce, while gold futures added 0.1% to $2,052.05 an ounce by 03:25 GMT. Both instruments were down between 0.8% to 1% this week.
Markets were now focused squarely on nonfarm payrolls data for December, due later on Friday. The data is expected to show more cooling in the labour market, although traders remained on edge over unexpected strength after stronger-than-expected weekly jobless claims and private payrolls data released earlier this week.
A cooling labour market and weaker inflation are the two key factors being considered by the Federal Reserve in cutting rates. While the two have cooled significantly in recent months, traders remained uncertain whether that would be sufficient to spur aggressive monetary easing by the Fed.
The CME Fedwatch tool showed that traders scaled back bets on a 25 bps cut in March 2024- to a 62% possibility from a 72% chance seen a week ago.
This notion triggered sharp gains in the dollar, and resulted in some decline in gold.
Still, the yellow metal was sitting on a strong melt-up through late-2023, and has now held above the $2,000 an ounce level for more than a month. Easing interest rates are expected to benefit bullion prices this year, given that high rates push up the opportunity cost of buying into gold.
