Gold prices (XAU/USD) are experiencing mild losses, trading around $2,690 in early Asian trading on Monday, as the US Dollar (USD) strengthens broadly. Despite this, the safe-haven appeal of gold may help cushion its losses amid ongoing uncertainties related to the policies of President-elect Donald Trump’s administration.
The recent US employment data, which exceeded expectations, has bolstered speculation that the Federal Reserve may not aggressively reduce interest rates this year. As a result, expectations have shifted, with traders now forecasting a modest 30 basis-point cut in rates, down from the previous prediction of a 45 basis-point reduction before the release of the non-farm payroll (NFP) report. This shift weighs on gold, which does not yield interest like other assets.
However, geopolitical risks tied to Trump’s policies are supporting gold’s resilience as a safe-haven asset. David Meger, Director of Metals Trading at High Ridge Futures, noted, “Gold is still showing resilience despite a much stronger-than-expected jobs report. One of the factors supporting gold is the uncertainty surrounding the U.S. presidential inauguration.”
In addition to domestic uncertainties, ongoing geopolitical tensions, particularly in the Middle East and the Russia-Ukraine conflict, may further affect gold’s price dynamics. Israeli airstrikes continue across Gaza, including near Gaza City, Nuseirat, and Bureij, while two attacks were reported in southern Lebanon’s Houmin Valley, according to Lebanon’s National News Agency.
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