XAU/USD Edges Higher Despite Mixed US Jobs Data As FOMC Minutes Hint at Slowing Rate Cuts

Gold prices climbed during the North American session, buoyed by a slightly hawkish tone in the latest Federal Reserve meeting minutes. The minutes suggested that the pace of interest rate cuts may slow down, a development that typically supports gold as a hedge against inflation.

While the US Dollar Index strengthened, US Treasury yields retreated slightly from recent highs. This mixed market reaction followed the release of the Fed’s December meeting minutes, which revealed that some policymakers favored keeping interest rates unchanged at the time.

The US jobs market presented a mixed picture. Initial Jobless Claims declined, indicating a tightening labor market. However, private sector employment growth, as measured by the ADP report, fell short of expectations.

Despite these mixed signals, gold prices remained resilient. This may be attributed to several factors, including:

Increased central bank demand: China’s central bank continued to increase its gold reserves, a trend that could underpin global gold demand and support prices.

Focus on longer-term inflation: Despite recent declines in inflation, concerns persist about potential inflationary pressures in the longer term. This could drive investors towards gold as a hedge against inflation.

Technical Factors:

Gold prices have shown signs of strength, reclaiming the 50-day Simple Moving Average. A sustained move above $2,660 could open the door for a further rally towards $2,700 and potentially test the December 12 peak at $2,726.

However, a break below the 100-day Simple Moving Average at $2,628 could signal weakness and potentially lead to a test of the $2,500 level.