Finance news
- Gold gains as traders react to President Trump’s threat of new reciprocal tariffs, enhancing its safe-haven status.
- US Nonfarm Payrolls fall short of expectations, yet a declining Unemployment Rate suggests a resilient labor market.
- PBoC’s increased Gold reserves and cautious comments from Fed officials contribute to the metal’s price dynamics.
Gold resumed its uptrend on Friday amid the escalation of the trade war between the US and China and a mixed US employment report. The XAU/USD trades at $2,862, up 0.24%.
US President Donald Trump’s plans to announce reciprocal tariffs on many countries next week lent a lifeline to Bullion traders as the yellow metal rose on those remarks. Therefore, tensions over the weekend could increase flows to Gold’s safe-haven appeal.
US data revealed that Nonfarm Payrolls in January missed the mark, but the Unemployment Rate dipped compared to estimates and December’s reading. The data suggests the labor market remains strong, which might prevent the Federal Reserve (Fed) from easing policy.
Following the data, Bullion prices jumped to the session’s highs of $2,886, but once the dust settled, Gold retraced to its previous level.
Earlier, reports emerged that the People’s Bank of China (PBoC) resumed buying Gold with reserves increasing from 73.29 million ounces to 73.65 million ounces.
Meanwhile, Fed speakers crossed the newswires, continuing with their patient rhetoric.
Minneapolis Fed President Kashkari sees the policy rate “modestly lower.” Chicago Fed President Goolsbee said recently that NFP data was solid and that rates would be lower, but the pace “will be slower with more fogginess.”
Fed Governor Adriana Kugler said the inflation rate “has gone sideways,” adding that “it makes sense to hold the policy rate where it is.”
Finance news Daily digest market movers: Gold price climbs alongside the US Dollar
- The US Dollar Index (DXY) edges up 0.32% and sits at 108.04 after hitting a daily low of 107.51.
- The US 10-year Treasury bond yield rises five basis points to 4.487%.
- US real yields, which correlate inversely to Bullion prices, climbed three basis points to 2.062%, a headwind for XAU/USD.
- US Nonfarm Payrolls in January dipped from 256K to 143K, missing the mark of 170K. The Unemployment Rate slid from 4.1% to 4%.
- Money market fed funds rate futures are pricing in 39 basis points of easing by the Federal Reserve in 2025.
Finance news XAU/USD technical outlook: Gold prices set to challenge $2,900
Gold’s trend is up yet bulls have failed to clear the $2,900 figure. The Relative Strength Index (RSI) is in overbought territory, while XAU/USD’s price action shows signs of exhaustion.
If Gold drops below $2,800, the next support would be the psychological $2,750 area, followed by the January 27 swing low of $2,730. Conversely, if the yellow metal rises above $2,900, the next key resistance would be the psychological $2,950, followed by $3,000.
Finance news Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
