A Daily Journey Through the Week's Market
Monday - 1.06.25: Gold prices remained steady, with spot gold at $2,635.39 per ounce. Investors awaited upcoming U.S. economic data, including December's nonfarm payrolls report, for insights into the Federal Reserve's interest rate decisions. Analysts noted that U.S. jobs data and other economic indicators could influence both the U.S. dollar and gold prices.
Tuesday - 1.07.25: Gold prices rose by 0.4% to $2,644.79 per ounce, driven by a weaker U.S. dollar as traders speculated that President-elect Donald Trump's tariff plans might be less aggressive than anticipated. Despite higher U.S. Treasury yields, which typically pressure non-yielding assets like gold, the metal managed to stabilize. Investors looked ahead to U.S. jobs data for further clues on the Federal Reserve's policy trajectory.
Wednesday - 1.08.25: Gold prices edged lower by 0.2% to $2,645.64 per ounce, pressured by higher U.S. Treasury yields and a stronger dollar following data suggesting the Federal Reserve might slow the pace of rate cuts this year. U.S. job openings rose to 8.098 million in November, indicating a robust economy and reducing expectations for multiple Fed rate cuts in 2025. Investors awaited further U.S. employment data and the minutes from the Fed's December meeting for additional guidance.
Thursday - 1.09.25: Markets were closed for a National Day of Mourning in honor of former President Jimmy Carter. Despite the closure, gold prices edged lower by 0.1% to $2,659.39 per ounce, pressured by profit-taking after recent gains. Treasury yields dipped, with the 10-year yield retreating to 4.689%, as markets awaited key economic indicators.
Friday - 1.10.25: Gold prices edged higher while silver dipped in early U.S. trading Friday, following a much stronger-than-expected U.S. employment report that bolstered hawkish monetary policy sentiment. December’s employment report showed nonfarm payrolls surging by 256,000, far exceeding the 160,000 forecast, with unemployment edging down to 4.1%. Analysts noted this signals a robust recovery in the labor market, intensifying expectations that the Federal Reserve will face challenges in lowering interest rates further this year.
Gold prices find footing amid strong U.S. jobs report
Gold prices showed volatility Friday as the U.S. labor market demonstrated unexpected strength, adding 256,000 jobs in December—well above economists' expectations of 164,000. The surprise boosted the U.S. dollar and sparked initial selling pressure in the gold market, though prices quickly recovered.
Why it matters:
Stronger-than-expected job growth signals a resilient labor market, complicating the Federal Reserve’s trajectory for rate adjustments. This could impact gold prices, which are highly sensitive to interest rate expectations and dollar strength.
By the numbers:
- Gold prices: Initially fell but recovered to trade at $2,688.80/oz, up 0.67% by 9:03 a.m. ET.
- Unemployment rate: Declined to 4.1%, surpassing forecasts of 4.2%.
- Wages: Average hourly wages rose by 0.3% in December, up 3.9% year-over-year.
What they’re saying:
- Adam Button, Market Analyst: "The stronger employment report is driving the U.S. dollar higher, adding pressure on gold prices."
- Michael Brown, Senior Analyst, Pepperstone: "This is not a 'game-changer' for monetary policy, as the Fed is likely to maintain a cautious approach into 2025."
What’s next:
Investors are closely watching gold’s support level at $2,650/oz ahead of the weekend, while Fed policy remains a key driver. Analysts expect a slower pace of rate adjustments in 2025, with potential inflation risks still on the horizon.
Gold steadies as Fed inches closer to neutral rate
Gold prices held firm despite a more hawkish tone from the Federal Reserve, which signaled a cautious approach to rate cuts amid persistent inflation pressures. The Fed minutes from its December meeting suggest the central bank is nearing a neutral policy rate, reflecting ongoing economic resilience.
By the numbers:
- Spot gold last traded at $2,659.70 per ounce, up 0.43% on the day.
- The Federal Reserve cut rates by 25 basis points in December, bringing total cuts to 100 basis points since September.
- The Fed now projects only two rate cuts in 2025, down from an earlier forecast of four.
The big picture:
The Fed’s December minutes highlight lingering concerns about inflation, noting that disinflationary trends may have stalled. Participants judged that upside risks to inflation remain elevated, and the path to a neutral policy rate may be slower than previously anticipated.
Driving the trend:
- Inflation uncertainty: Higher-than-expected inflation readings and potential changes in trade and immigration policy are keeping the Fed cautious.
- Economic resilience: The central bank acknowledged robust economic activity, supporting its slower pace of easing.
- Neutral rate proximity: The Fed sees the policy rate significantly closer to its neutral value, signaling a pause in aggressive cuts.
What’s next:
Gold investors will continue monitoring Fed signals as the central bank balances inflation risks with economic stability. A slower pace of easing could cap near-term gold gains, but persistent inflation concerns and geopolitical uncertainties could support prices.
The bottom line:
Gold’s resilience in the face of a hawkish Fed underscores its appeal as a hedge against ongoing economic and inflation risks. As the Fed nears a neutral rate, gold’s trajectory will depend on how inflation and employment trends evolve in 2025.
China doubles down on gold
China’s central bank is making waves in the gold market again, with its latest purchase reinforcing a strategy to reduce reliance on the U.S. dollar. The renewed buying spree is driving up gold prices and shifting global market dynamics, with analysts suggesting this is only the beginning of a long-term trend.
By the numbers:
- China’s central bank purchased 10 tonnes of gold in December, marking its second consecutive month of increases after a six-month pause.
- Total gold reserves climbed by 44 tonnes in 2024, reaching 2,280 tonnes, according to the World Gold Council.
- Gold accounts for just 5% of China’s $3 trillion in foreign reserves, far below India (9.3%) and other central banks.
The big picture:
China’s renewed appetite for gold is fueling a rally in prices, with spot gold futures trading near $2,648 per ounce, a six-week high. Analysts link the purchases to efforts to diversify away from the U.S. dollar and enhance the yuan’s global credibility.
Driving the trend:
- Central bank gold purchases are outpacing demand from Western investors and ETFs.
- Analysts expect China to remain a major gold buyer as central banks now account for 15% of global gold demand—a trend that could last another decade.
What’s next:
China’s gold buying is unlikely to slow, with analysts predicting more acquisitions to align reserves with global peers. This persistent demand could further support gold prices in 2025 and beyond.
Tariff threats shake silver markets, gold poised to rally
President-elect Donald Trump’s tariff threats are sending shockwaves through silver markets, creating an unprecedented disruption in global inventory flows. Meanwhile, analysts at TD Securities predict gold will stage a strong rally in the second half of 2025 as Federal Reserve rate cuts resume.
By the numbers:
- Silver spot prices hovered near $29.93 per ounce, down 0.31% after encountering resistance at $30.30.
- Gold traded at $2,655.66 per ounce, up 0.27% on the day, following a brief spike to $2,670.15.
- TD Securities forecasts silver could reach $40 per ounce by year-end, while gold may see renewed strength in H2 2025.
The big picture:
Trump’s tariff threats on metals are forcing traders to move physical silver from London to the U.S., hedging against potential duties. This shift risks depleting London’s vault inventories, the backbone of global over-the-counter silver trades.
Driving the trend:
- Silver: A potential "stock-out" in London, where inventories fall below critical thresholds, could trigger explosive price action. Ongoing silver deficits and growing industrial demand, particularly from the solar sector, exacerbate supply risks.
- Gold: Renewed physical demand from Asia, spurred by currency pressures and central bank purchases, is reigniting interest after a prolonged buyer’s strike.
What’s next:
- Silver: Analysts warn of a looming crisis in the silver market, with current inventory buffers insufficient to meet global demand if tariffs materialize.
- Gold: While range-bound in early 2025, gold is expected to rally strongly in H2 as the Fed accelerates rate cuts, driving institutional and retail buying.
The bottom line:
Silver markets face a perfect storm of inventory depletion and growing industrial demand, while gold’s long-term outlook remains bullish, supported by central bank buying and macroeconomic shifts. Both metals could see significant price gains in 2025.
Goldman Sachs revises $3,000/oz gold forecast to 2026
Gold’s record-breaking rally may take longer to hit the $3,000 mark, with Goldman Sachs now projecting the milestone for mid-2026 instead of late 2025. Slower Federal Reserve rate cuts and weaker-than-expected speculative demand are tempering the yellow metal’s price growth this year.
By the numbers:
- Goldman Sachs now forecasts gold prices to peak at $2,910 per ounce by Q4 2025.
- Spot gold last traded at $2,633.89 per ounce, down 0.22% after volatility pushed prices as high as $2,649.52 earlier in the session.
- Central bank purchases are expected to average 38 tons per month through mid-2026.
The big picture:
Gold’s rally is facing headwinds from weaker speculative demand, particularly in ETFs, as uncertainty eases following the U.S. election. However, robust central bank buying continues to underpin long-term price growth, driven by diversification away from the U.S. dollar and concerns over U.S. debt.
Driving the trend:
- Fed policy: Goldman now expects 75 basis points in rate cuts for 2025, down from 100, slowing gold’s cyclical lift from lower rates.
- Central bank demand: Nations are steadily increasing their gold reserves, a structural driver for higher prices.
- Geopolitical risks: Potential trade tensions under the incoming Trump administration could revive speculative positioning in gold.
What’s next:
Goldman Sachs maintains a bullish outlook for gold but acknowledges that price growth may be slower than anticipated. Central bank buying will likely remain a key support, even as speculative flows fluctuate with shifting economic and political conditions.
The bottom line:
Gold’s path to $3,000 may be delayed, but its long-term drivers—central bank demand and global economic uncertainty—remain firmly in place. Investors should brace for near-term volatility while keeping an eye on geopolitical developments and Fed policy shifts.
Mark Cuban: Bitcoin trumps gold as a store of value
Billionaire investor Mark Cuban has reignited the Bitcoin vs. gold debate, declaring his preference for the cryptocurrency over the precious metal. In a recent interview, Cuban cited Bitcoin’s utility, ease of use, and international portability as reasons why it holds more value than gold.
By the numbers:
- Bitcoin surged 136% in 2024, reaching $100,000 per token, while gold rose 26%, ending the year above $2,600 per ounce.
- Spot gold last traded at $2,668.70 per ounce, up 0.21%, while Bitcoin fell 0.41% to $94,240 per token.
The big picture:
As Bitcoin’s utility as a currency grows, it’s challenging gold’s status as a store of value. Cuban criticized gold’s impracticality compared to Bitcoin’s ability to be fractionalized, used for purchases, and transferred globally. This narrative is gaining traction, especially after Bitcoin significantly outperformed gold last year.
Driving the trend:
- Bitcoin’s utility: Cuban argued that Bitcoin’s ease of transaction and digital nature make it more functional than gold.
- Gold’s stability: Analysts highlight gold’s advantage as a stable asset amid economic uncertainty, contrasting with Bitcoin’s volatility.
- Economic resilience: While Bitcoin has rallied, some analysts question its reliability as a store of value, especially given its past volatility and untested performance in economic downturns.
What’s next:
Bitcoin’s rally could continue to divert interest from gold, particularly if it sustains momentum in 2025. However, economic uncertainty and inflationary pressures may keep gold attractive, especially if a stagflationary environment develops.
The bottom line:
Bitcoin’s rising popularity as a digital store of value is shaking up the market, but gold remains a stalwart in times of economic uncertainty. Investors will need to weigh Bitcoin’s potential against its volatility as both assets compete for their share of portfolios in 2025.
Gold’s role: Diversifier and risk hedge for professional investors
Gold remains a cornerstone of professional investment strategies, valued for its ability to diversify portfolios and hedge against financial, economic, and geopolitical risks, according to a WisdomTree survey of 800 professional investors.
By the numbers:
- Primary reason for holding gold: 36% of respondents cited portfolio diversification.
- Other motivations: 35% use gold as an inflation hedge, 31% to manage financial market volatility, and 27% for geopolitical risk mitigation.
- Portfolio insights: Professional investors, on average, allocate only 5.42% of their portfolios to gold, well below the optimal levels suggested for maximizing Sharpe ratios.
The big picture:
Gold’s dual role as a defensive and cyclical asset underpins its appeal. Its low correlation with equities and bonds makes it a powerful tool for risk management, while its ability to appreciate during inflationary periods adds cyclical upside.
Driving the trend:
- Financial risks: Market metrics like the VIX and MOVE indicate calm, but recent events like the yen carry trade unwind highlight how quickly risks can escalate.
- Economic uncertainty: Trade policies under President-elect Trump and global policy uncertainty could disrupt growth, driving demand for gold as a hedge.
- Geopolitical tensions: Conflicts like Russia-Ukraine and regional instability in the Middle East continue to elevate gold’s status as a safe-haven asset.
What’s next:
As tail risks persist, professional investors are expected to revisit their gold allocations, particularly in light of ongoing geopolitical and economic uncertainties. An uptick in speculative positioning could further drive demand if tensions escalate.
The bottom line:
WisdomTree’s findings confirm gold’s enduring value in managing risk and enhancing portfolio performance. While underutilized by many investors, gold remains a critical tool for hedging against unpredictable market shocks and tail risks.
Next Week’s Key Events
Monday, Jan. 13
- No major reports scheduled
Tuesday, Jan. 14
- 8:30 am: Producer Price Index (Dec.)
- 10:00 am: Kansas City Fed President Jeffrey Schmid speaks
Wednesday, Jan. 15
- 8:30 am: Consumer Price Index (Dec.)
- 8:30 am: Empire State Manufacturing Survey (Jan.)
- 8:30 am: Philadelphia Fed Manufacturing Survey (Jan.)
Thursday, Jan. 16
- 8:30 am: Initial Jobless Claims (Jan. 11)
- 8:30 am: U.S. Retail Sales (Dec.)
Friday, Jan. 17
- 8:30 am: Housing Starts and Permits (Dec.)
- 9:15 am: Industrial Production and Capacity Utilization (Dec.)
IMPACT ON PRECIOUS METALS MARKETS
Producer Price Index (PPI): The PPI measures inflation at the producer level. If inflation rises, it can weaken the U.S. dollar, boosting gold and silver prices as they are often seen as hedges against inflation.
Kansas City Fed President Jeffrey Schmid's Speech: Market participants will look for insights into future monetary policy. Dovish comments could support gold and silver prices, while hawkish signals might weigh on them.
Consumer Price Index (CPI): CPI measures consumer inflation. Higher-than-expected inflation may lead to expectations of tighter monetary policy, which can pressure gold and silver. Conversely, lower inflation may support their prices due to decreased rate hike fears.
Empire State Manufacturing Survey: A gauge of manufacturing health in New York. Weak data may signal economic slowdown, boosting gold and silver as safe-haven assets.
Philadelphia Fed Manufacturing Survey: Similar to the Empire State Survey, it reflects manufacturing conditions in the Philadelphia region. Negative surprises could increase demand for gold and silver as economic uncertainties rise.
Initial Jobless Claims: A high number of claims may indicate a weakening labor market, potentially increasing safe-haven demand for gold and silver. Conversely, strong numbers might weigh on these metals.
U.S. Retail Sales: A key measure of consumer spending. Weak retail sales can signal economic weakness, supporting gold and silver. Strong sales may have the opposite effect, reducing their appeal.
Housing Starts and Permits: Reflects health in the housing sector. Weak numbers might indicate broader economic concerns, boosting demand for gold and silver as safe-haven assets.
Industrial Production and Capacity Utilization: These metrics show industrial activity and resource utilization. Weak data may raise concerns about economic growth, supporting gold and silver prices. Strong results could lead to reduced demand for these metals.
