Gold News

Gold Price Spikes But Falls on US Jobs Data Ahead of 'No Change' Fed

The GOLD PRICE spiked but then dropped from new 2-week highs for US Dollar investors on Tuesday, falling as new data ahead of tomorrow's Federal Reserve interest rates statement said US job openings were greater than analysts predicted in December.
Ceasefire talks in the Middle East were meantime rejected by Israel's Prime Minister Benjamin Netanyahu, putting his emergency coalition government at risk according to one Cabinet minister.
Silver prices also hit 2-week highs before dropping back but holding above the $23 per Troy ounce mark.
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With no-one expecting any change to US Fed monetary policy on Wednesday, the 'Jolts' job openings data saw betting on the Fed cutting its key interest rate at the following meeting in March sink to 2-in-5 of all current positions, the lowest since late November according to the CME derivatives exchange.
Gold had earlier jumped to $2048 per Troy ounce, and while it then fell $20 within 35 minutes of the Jolts figure, it still set its highest London 3pm benchmark in 2 weeks around $2040.
Likelihood of a Fed rate cut in March 2024 versus the Dollar gold price. Source: BullionVault
With the gold price in Dollars down 1.3% so far in 2024 from last year's record-high finish, the S&P500 index of US corporate stocks also fell on Tuesday, trimming its 2024 gains to 3.3% after setting 8 new all-time highs with a fresh record again on Monday.
Bonds also fell in price as expectations faded for a March rate cut, pushing up the annual yields offered to new buyers of 10-year US government debt from 3.88% to 4.09%, albeit down 10 basis points from a week ago after the Treasury yesterday cut its New Year borrowing forecast by $55 billion from October's estimate to $760bn.
That's still more than 1/10th larger than the federal government's net borrowing in Jan-March last year, and – with Fed interest rates at 2-decade highs above 5.25% per annum – the federal government is already spending $1 trillion per year on debt-interest repayments alone, a 21st Century high in terms of the country's GDP at 3.5%.
"The Fed, by most metrics, remain restrictive," says a note from strategist Nicky Shiels at Swiss bullion refiners and finance group MKS Pamp.
"FWIW, historically on average there are 8 months between the last Fed rate hike and the first Fed rate cut. So with the Fed hike back in July 2023, March FOMC is exactly 8 months later."
Rising back above ¥300,000 per Troy ounce for Japanese investors this morning – a record high when reached in late-October – the price of gold in No.1 consumer nation China rose for a 3rd session running, back above ¥480 per gram.
Gold then spiked to 4-week highs in Euro terms of €1886 at the start of London trade, and the UK gold price in Pounds per ounce hit its highest since mid-January at £1607 before also easing back.
Economic output across the 20-nation Eurozone didn't shrink at the end of 2023 as analysts forecast, new data said Tuesday, with full-year GDP rising 0.5% on Eurostat's first estimate.
Consumer borrowing in the UK sank last month, the Bank of England reports, with mortgage lending, net of repayments, showing zero growth across 2023 – "the first time since the series began in March 1994."
"We are prepared for a long-term confrontation with the forces of tyranny, the Americans, the British," said Mohamed al-Atifi, commander of Yemen's Houthi forces today, rebuking the US-UK attacks and patrols aimed at ending his group's strikes on Red Sea shipping, purportedly done to encourage an end to Israel's invasion of Gaza.
"We will not remove the IDF from the Gaza Strip and we will not release thousands of terrorists," said Israel's Netanyahi today when asked about ceasefire talks being brokered by Qatar, the US and Egypt through Paris.
"None of this will happen. What will happen? Absolute victory!"
"We would have to pay a heavy price [in a hostage deal]," says Israel's National Unity minister Chili Tropper. "[But] if there is a deal we can live with and Netanyahu doesn't sign on it, we will leave the government."
The UK should consider recognizing a Palestinian state, foreign minister David Cameron said Tuesday, helping make a "two-state solution" to the 76-year conflict "irreversible".

Adrian Ash

Adrian Ash, BullionVault Gold News

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

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