Rate Cut Narrative Strengthens, Gold Rises
Gold prices strengthened on Wednesday, supported by a weaker US dollar and falling US bond yields after the latest economic data reinforced the narrative that the Federal Reserve is likely to continue its policy easing. Investors are now adopting a more defensive stance while awaiting the release of US Nonfarm Payrolls (NFP), which has the potential to trigger further volatility.
Based on updated spot prices, spot gold is at around $5,076.10 per ounce, up $34.20 (+0.68%). This data was recorded at 4:43 AM ET (approximately 4:43 PM WIB).
In the derivatives market, US gold futures also strengthened. The April contract rose around 0.8% to $5,072.60 per ounce, in line with the strengthening trend of spot gold and the weakening dollar.
The main trigger came from the data side: US retail sales in December were stagnant, below market expectations. These weakening consumption signals have prompted market participants to raise the probability of interest rate cuts again, as slowing demand is seen as reducing inflationary pressures and opening up room for looser policy.
The weakening dollar makes USD-denominated commodities relatively more attractive to non-US buyers, while falling yields reduce the "opportunity cost" of holding non-yielding assets like gold. This combination of two factors keeps the gold bias positive, even though some Fed officials continue to signal a cautious and data-driven approach.
Looking ahead, the market focus is on the Nonfarm Payrolls (NFP): a weaker-than-expected jobs figure could reinforce the "more dovish Fed" scenario and further support gold, while a strong data surprise could potentially trigger a dollar/yield rebound and curb gold's near-term gains.
Source: Newsmaker.id
