Key Takeaways

  • Recently released Fed meeting minutes push the dollar higher
  • Focus shifts to upcoming December jobs report

Capped by Uncertainty

Spot gold is eyeing up a close in red territory this week, currently pricing in at $2,040/oz. Taking aim at the first weekly loss since early December, the glimmering commodity is down 1.2% in the last five days. The precious metal has slipped behind its recent high of $2,198 on the back of a stronger dollar, fueled by diminishing prospects of an easing monetary policy. 

The dip comes as investors recalibrate their expectations based on recently released meeting minutes from the Federal Reserve’s December get-together. The minutes revealed a level of uncertainty from policymakers that dumped ice-cold water on investors’ hopes of interest rate cuts in early 2024 as the battle to pull inflation to 2% marches on.

Locking the disappointment in further, according to the CME FedWatch tool, less than 5% of polled participants believe the Fed will slash rates from its 5.25 – 5.50% level at its January 30 – 31st gathering. 

In turn, the market sought out the ever-resilient US dollar, which has risen 1.35% in the last five days to 102.7, as of Friday morning. A stronger dollar weakens the appeal of the non-yielding precious metal, making it more expensive for international investors, given that gold is globally priced in US dollars.

In Other News

While gold reduces to a simmer, all eyes turn to upcoming jobs data. The US Non-Farm Payrolls (NFP) report is set to drop later today, with investors watching closely for further clues on the interest rate outlook.

The Federal Reserve will be keeping a keen eye on the print, with the report serving as a key gauge of economic health. November reported 199,000 jobs created, anything lower for December would indicate a cooling labor market – which would further reinforce the Fed’s “higher-for-longer” stance. 

To cap off the week, traders should keep a close eye on the NFP data, and conduct independent research on the effect the data might have on the market before making any moves.