Gold’s Weekly Winning Streak Ends Amid Diminished Rate Cut Hopes

Gold is heading towards marking its first weekly decline in a month this Friday, as the dollar has been bolstered by a retreat in expectations for an early cut to interest rates in the United States. Meanwhile, investors are awaiting a key employment report later today in search of further indications concerning interest rates.

As of 1:56 AM Greenwich Mean Time, the price of gold in the spot market rose by 0.1% to $2,054.10 per ounce. This represents a decline of approximately 0.8% since the start of the week, following three consecutive weeks of gains.

American futures contracts for gold increased by 0.2% reaching $2053.00 per ounce, according to Reuters.

The dollar index is on track to post its best weekly performance since July 2023, making the precious metal more expensive for holders of other currencies.

Indicative of the continued strength of the American job market, data released last Thursday showed a greater-than-expected decrease in the number of new claims for unemployment benefits last week. Additionally, private sector employers hired more workers than anticipated in December.

The meeting minutes from the Federal Reserve (the US central bank) held on the 12th and 13th of December revealed a growing sentiment among policymakers that inflation was becoming more manageable. However, they indicated a high level of uncertainty regarding expectations for interest rate cuts.

A reduction in interest rates decreases the opportunity cost of holding gold, which does not yield any return.

The Fed Watch tool by CME Group has shown that investors’ bets on interest rate cuts have decreased. Markets now anticipate a 65% chance of a rate cut by March, compared to a 90% expectation a week earlier.

Investors are eagerly awaiting the release of the non-farm employment report from the United States later today, in search of additional indicators.

Regarding other precious metals, silver prices in spot transactions increased by 0.6% to $23.13 per ounce, while platinum decreased by 0.3% to $953.61.

The palladium rose by 0.7% to $1044.23 after experiencing a decline that lasted for eight sessions.