Rising Treasury yields have been one of the main obstacles for gold. Since October, the 10-year yield has climbed from 3.599% to 4.631%, reflecting inflation concerns and strong economic performance. The dollar has followed a similar path, with the U.S. Dollar Index reaching 108.541. A firm dollar reduces gold’s appeal by increasing its cost in other currencies.
Should the NFP report point to a softening labor market, yields may decline, easing some of the pressure on gold. Conversely, stronger job growth could drive yields higher, reinforcing the current bearish sentiment on gold. This relationship between the labor market, yields, and the dollar will be critical in shaping gold’s performance over the next few weeks.
Political and Geopolitical Factors Remain in Play
Investors are also paying close attention to political developments. President-elect Donald Trump’s proposed tariffs and economic policies are widely expected to contribute to inflationary pressures, which may support gold as an inflation hedge. Geopolitical tensions in Eastern Europe and the Middle East continue to add to gold’s appeal as a safe-haven asset.
Weekly Outlook: Gold Poised for Volatility
Gold’s performance in the coming week will depend heavily on economic data and bond market trends. If the NFP report surprises to the downside, gold could move higher as yields soften. Conversely, strong labor data may drive yields up and keep gold under pressure. While the broader picture for gold remains positive, short-term price action will hinge on the direction of yields and the dollar.
Traders should remain attentive to Treasury market movements and Fed policy updates, as these will be key drivers of gold prices leading into the Fed’s next meeting.
Source: Gold News: Could Strong Jobs Data Cap XAU/USD’s Upside Potential?
