Gold (XAU/USD) is experiencing mild losses, hovering around $2,690 in early Asian trading on Monday, largely due to the broad strength of the US Dollar (USD). However, demand for the safe-haven asset could be bolstered by ongoing uncertainties surrounding the policies of President-elect Donald Trump, potentially limiting the precious metal’s losses.
The release of stronger-than-expected US employment data on Friday has reinforced the view that the Federal Reserve may ease off on aggressive interest rate cuts this year. This development is putting pressure on non-yielding assets like gold. Traders now expect the Fed to reduce interest rates by just 30 basis points (bps) throughout the year, a sharp contrast to earlier expectations of a 45 bps cut prior to the jobs report.
Despite this, gold’s traditional safe-haven appeal remains intact, particularly in light of the risks associated with Trump’s upcoming administration. “Gold is still showing resilience despite a much stronger-than-expected jobs report… One of the key factors supporting gold right now is the uncertainty ahead of the U.S. presidential inauguration,” said David Meger, director of metals trading at High Ridge Futures.
Additionally, rising geopolitical risks, including the ongoing conflict in the Middle East and the Russia-Ukraine war, continue to pose downside risks to the yellow metal. Israeli airstrikes have been reported throughout Gaza, particularly near Gaza City, Nuseirat, and Bureij, with two attacks also hitting southern Lebanon’s Houmin Valley, as reported by Lebanon’s National News Agency.
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