Gold Prices Drop Amid Strong US Dollar and Interest Rate Expectations
Gold prices saw a slight decline today, Thursday, following the rise of the US dollar, driven by the release of stronger-than-expected job data for January.
This decline reflects reduced expectations for interest rate cuts in the near future, while investors await inflation data scheduled for tomorrow, Friday, for additional indicators on the monetary policy direction.
As of 09:18 GMT, gold in spot transactions fell by 0.34% to $5072.22 per ounce, after ending the previous session up by more than 1%.
US gold futures for April delivery recorded a decrease of 0.2% to $5087.30 per ounce, according to Reuters.
Christopher Wang, an analyst at OCBC, said:
"The strong jobs report, which led to reduced expectations for interest rate cuts, may be the reason for gold's weak performance today."
The dollar index rose after the report confirmed the strength of the US economy, increasing the cost of dollar-denominated metals for holders of other currencies.
The data showed an unexpected acceleration in job growth in the United States and a drop in the unemployment rate to 4.3%.
However, revisions showed that the economy added only 181,000 jobs in 2025 instead of the previously estimated 584,000, indicating that the optimistic picture of the labor market may be overstated.
In another financial context, the Congressional Budget Office projected a slight increase in the US budget deficit for fiscal year 2026 to $1.853 trillion, reflecting the impact of President Donald Trump's economic policies amid low economic growth.
A Reuters survey showed that the Federal Reserve will keep interest rates unchanged until the end of Chairman Jerome Powell's term in May, but may cut them immediately in June, amid warnings that monetary policy under his potential successor Kevin Warsh could become excessively accommodative.
Investors are currently awaiting today's weekly jobless claims report and tomorrow's inflation data to determine the direction of upcoming monetary policy.
Other Precious Metals:
Silver fell in spot transactions by 0.52% to $83.4 per ounce after rising 4% on Wednesday.
Platinum dropped by 0.3% to $2126.52 per ounce.
While palladium rose by 1.4% to $1722.67 per ounce.
