Gold price today, gold prices are hovering near a four-week high today, buoyed by recent soft employment data from the United States.
Gold Prices Surge to Near Four-Week High Amid Weak US Employment Data
Gold (XAU/USD) reached a near four-week high during yesterday's trading session, following a weaker-than-expected report on US private employment. This surge comes as US bond yields continued to rise amid speculation about potential emergency measures by President-elect Donald Trump to implement a new tariff program.
The ADP National Employment Report revealed a significant slowdown in US private payroll growth, dropping from 146,000 in November 2024 to just 122,000 in December. Market participants are now eagerly awaiting the US jobs report set to be released on Friday, which could provide further insights into the Federal Reserve's future monetary policy decisions.
The Fed's recent meeting minutes indicated a consensus among policymakers that inflation is likely to continue its decline this year. However, they also acknowledged rising risks of persistent price pressures, potentially influenced by President Trump's economic policies. Notably, physical gold exchange-traded funds (ETFs) recorded their first inflow in four years, despite a 6.8 metric ton decline in holdings, according to the World Gold Council.
During Asian and early European trading hours, XAU/USD primarily traded within a narrow range of $2,656–$2,662. Today, market participants are anticipating the release of the US Jobless Claims report at 1:30 p.m. UTC. A higher-than-expected reading could be bullish for gold, while lower data may trigger bearish momentum.
The euro (EUR/USD) dipped 0.2% against the US dollar (USD) on Wednesday as US bond yields continued their upward trend. This movement follows reports that President-elect Donald Trump is considering using emergency measures to impose new tariffs.
The US Dollar Index (DXY) remained near a multi-month high, with the 10-year government bond yield climbing to its highest level since April 2024. This rise came after reports that Trump is contemplating declaring a national economic emergency to justify imposing universal tariffs on both allies and adversaries.
"This feeds into the whole theme of a strong US dollar. Even with the disappointing ADP employment data, the dollar remains firm," said Marc Chandler, chief market strategist at Bannockburn Global Forex. Despite the weaker ADP report, EUR/USD continued to decline, raising concerns about potential additional tariffs on the Eurozone, a key trading partner of the US.
The German bond market also experienced a sharp sell-off, with the 10-year Bund yield reaching a more than five-month high amid escalating eurozone inflation. The divergence in monetary policy expectations between the European Central Bank (ECB) and the Federal Reserve (Fed) continues to favor the greenback, with investors pricing in a 96% chance of a 25-basis-point rate cut by the ECB on January 30.
The Canadian dollar (USD/CAD) traded within a narrow range yesterday, finishing essentially unchanged against the US dollar (USD). Since late September 2024, USD/CAD has risen almost continuously, driven by the Fed's less dovish monetary policy and growing concerns about potential economic tensions between the US and Canada.
Concerns about US trade tariffs have heightened investor anxiety. However, USD/CAD is currently below its multi-year high set on January 3, when Trump threatened to impose a 25% tariff on Canadian imports. "The broader rebound in the USD appears to be influenced by tariff discussions as Trump considers emergency legislation," noted George Davis, chief technical strategist at RBC Capital Markets.
The performance of crude oil, a key Canadian export, has also weighed on the loonie, with prices declining recently due to large builds in US fuel inventories. The Bank of Canada (BOC) is expected to adopt a more dovish stance than the Fed, with forecasts indicating a decline in the Canadian benchmark rate to around 2.75% by June 2025.
Earlier today, USD/CAD showed little change during Asian and early European trading sessions. With most American markets closed for the National Day of Mourning, volatility in all USD pairs is likely to remain low. The market awaits crucial reports that may offer insights into the prospects for further interest rate cuts by both the Fed and the BOC tomorrow.
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