In a volatile market, the price of gold is on track for its biggest weekly gain since early December, with spot gold consolidating cautiously after four consecutive gains. On Friday, the U.S. index dropped below 103 and U.S. bond yields fell, reflecting a possible decrease in the likelihood of a March interest rate hike. The key factor for the future of gold prices hinges on the release of U.S. non-farm payroll data.
At 21:30 Beijing time on Friday evening, investors will closely watch the release of the U.S. non-farm payrolls data, which is expected to show the creation of 180,000 new jobs in January. If the data unexpectedly worsens, it may increase the likelihood of the Federal Reserve cutting interest rates in March, leading to a positive impact on gold prices.
Economists predict that the U.S. non-farm payrolls report may sway the market. The market has almost fully priced in a May rate cut, while the market is currently pricing in a 37.5% chance of the Fed cutting interest rates in March. Experts have varying opinions, with some predicting three interest rate cuts in 2024 and others expecting more aggressive cuts starting as early as March.
Lower interest rates increase the appeal of gold as a non-yielding asset. Additionally, concerns about the U.S. regional banking sector have increased the appeal of safe-haven assets such as gold and U.S. Treasuries.
Traders are closely watching the U.S. non-farm payrolls data as its outcome will significantly impact the market and potentially set the future direction for gold prices.