Spot Gold traded in proximity to a 7 1/2-week high of $4,353.55/oz. on Wednesday, after the latest US employment data indicated a softening labor market and reinforced expectations of further policy easing by the Federal Reserve next year.
Employers in all sectors of the US economy, excluding farming, added 64,000 job positions in November, after shedding 105,000 jobs in October. Employment increased in health care and construction in November, but the federal government continued to lose jobs.
The unemployment rate in the country surged to 4.6% in November from 4.3% in August, while surpassing market expectations of 4.4%. It has been the highest jobless rate since September 2021.
The Federal Reserve delivered a largely anticipated rate cut last week, while noting it will wait for clearer signs on a cooling job market and inflation, which “remains somewhat elevated”.
But, the vote was divided, as three FOMC members continued to vote against the rate reduction.
FOMC policy makers signaled just one 25 bps rate cut for next year, or the same projection as in September.
Yet, investors continue to expect two rate cuts of 25 basis points each for 2026.
Lower interest rates tend to reduce the opportunity cost of holding Gold, which pays no interest.
Spot Gold was last up 0.29% on the day to trade at $4,314.65 per troy ounce.
Strong central bank buying, US tariff policies, potential rate cuts by the Federal Reserve, robust ETF inflows and geopolitical uncertainty have fueled Gold’s rally to a series of record highs this year. Its current all-time high stands at $4,381.21/oz.
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