Markets await non-farm payrolls as they speculate on Fed cuts

The yellow metal appears to have settled into a trading range between $2,020 and $2,050 after briefly hitting a record high above $2,100 at the start of the week.

While dovish comments from Fed Chair Jerome Powell boosted expectations that the Fed would cut rates in March 2024, a series of different factors encouraged gold's rise.

However, markets have tempered these expectations throughout the week, particularly due to some signs of resilience in the US economy.

Increased safe-haven demand following the attack on US ships in the Red Sea also supported gold prices, but the lack of any further escalation in the Middle East helped ease tensions in the markets.

Spot gold held steady at $2,026.30, while gold futures expiring in February fell 0.2% to $2,043.05.

MARKETS AWAIT NON-FARM PAYROLLS AS THEY SPECULATE ON FED CUTS

Investors are now focused on the November non-farm payrolls data to be released on Friday for new clues regarding the labor market.

Employment and job openings data released earlier this week pointed to a slowdown in the US labor market. However, markets are awaiting definitive signals from the non-farm payrolls data.

The data in question will also be released in an environment where uncertainty regarding the timing of Fed interest rate cuts is increasing. While the Central Bank is expected to keep interest rates steady next week, markets remain uncertain about when it will begin its easing policy.

So far, Fed officials have shown little inclination to start cutting interest rates, and Powell recently reiterated his higher-for-longer stance. However, investors believe that as inflation and the slowdown in the labor market continue, the Fed's tone could change in the coming months.

Gold is expected to benefit from signals of a less hawkish Fed and a slowing labor market. The yellow metal has comfortably maintained the $2,000 level since the end of November, which could be a harbinger of further strength in the coming weeks.

COPPER REBOUNDS ON POSITIVE CHINESE IMPORT DATA

Among industrial metals, copper prices recorded a sharp rise, recovering from three consecutive days of losses, following data showing that China's imports of the red metal hit their highest level in two years.

Copper prices for March delivery rose 0.7% to $3.7568.

China's copper imports rose 10.1% in November to 550,566 tons, reaching their highest level since December 2021. The data showed that China's demand for copper remains strong even as other aspects of the economy slow down.

While China's overall imports unexpectedly contracted in November, its exports grew for the first time in six months.

News Source: 12punto