Gold Holds Strong Despite Surprising US Jobs Data
Gold prices strengthened on Wednesday, remaining above the psychologically important US$5,000/oz level, despite the market receiving stronger-than-expected US jobs data. XAU/USD was seen around US$5,076/oz, up around 1% (real-time), indicating that buying interest remains active despite a brief turn toward a more hawkish interest rate outlook.
The main trigger came from the January Nonfarm Payrolls (NFP) release, which showed an increase of 130,000 jobs and a drop in the unemployment rate to 4.3%. This data immediately changed the market's interpretation of the Fed's actions: the likelihood of an imminent rate cut diminished, while expectations for the next rate cut tended to shift further back.
However, gold did not automatically weaken, as the "big story" remained: volatility following the major rally in late January, concerns about policy direction, and the need for hedging ahead of the upcoming data series—particularly inflation. At the same time, previously weak consumption data still looms, leading some market players to believe the economy isn't completely safe from a slowdown.
From the bond market perspective, solid NFP data prompted yield adjustments and kept gold's rally from becoming too wild. Bloomberg noted that the 10-year yield rose to around 4.20%, and money markets shifted their estimated timing for an interest rate cut to July from June—conditions that usually act as a brake on gold, but this time weren't strong enough to reverse its trend.
Going forward, traders will typically focus on two things: (1) whether the dollar continues to strengthen after the interest rate repricing, and (2) whether inflation data reinforces or undermines the "Fed will ease" narrative. As long as this uncertainty remains high, gold tends to remain cushioned—although gains could be more gradual and prone to intraday volatility.
Source: Newsmaker.id
