Gold traded slightly higher near $5,060 in early Asian trade on Thursday, staying above $5,050. It rose even after stronger US labour data, with US CPI inflation due on Friday.<\/p>\n
Demand for safe assets supported gold amid ongoing tension and uncertainty between the US and Iran. Donald Trump said he wanted talks with Iran to continue after meeting Benjamin Netanyahu, and warned he may act against Tehran if no nuclear deal is reached.<\/p>\n
US Nonfarm Payrolls rose by 130,000 in January versus a 70,000 forecast, and followed 48,000 in December after a small downward revision. The Unemployment Rate fell to 4.3% from 4.4%, against expectations for 4.4%.<\/p>\n
Kansas City Fed President Jeff Schmid said rates need to stay restrictive to push inflation down, and said he is not seeing much restraint in the data. Markets are watching Friday\u2019s CPI, with headline and core CPI both expected at 2.5% year on year in January.<\/p>\n
We are seeing gold caught between two powerful forces, creating a tense setup for the coming weeks. The persistent geopolitical friction between the US and Iran provides a solid floor of safe-haven demand for the metal. However, a strong US dollar, buoyed by robust labor market data, is creating significant headwinds.<\/p>\n
This tug-of-war suggests a spike in volatility is likely, especially with the key US CPI inflation report due this Friday. For traders, this is an environment where options strategies designed to profit from a large price move, such as a straddle, could be considered. The market is priced for a reaction, and being positioned for movement itself, rather than a specific direction, could be prudent.<\/p>\n
We must remember the inflation battles throughout 2025, where stickier-than-expected prints repeatedly forced the Fed\u2019s hand. The latest US CPI data from December 2023 in the real world showed core inflation at 3.9%, highlighting how difficult it can be to quell price pressures. If Friday’s report shows a similar upside surprise from the expected 2.5%, it would validate the Fed’s restrictive stance and likely send gold prices sharply lower.<\/p>\n
On the other hand, the geopolitical premium holding gold above $5,000 cannot be underestimated. History shows us that during periods of heightened international tension, such as the initial phases of the Russia-Ukraine conflict in 2022 when gold rallied over 10% in just a few weeks, safe-haven flows can overwhelm economic data. Any breakdown in US-Iran talks could easily become the market’s primary focus, pushing economic reports to the background.<\/p>\n
The strong jobs report, adding 130,000 payrolls when only 70,000 were expected, gives the Federal Reserve ample justification to keep interest rates high. We see this validated in recent Fed commentary, which emphasizes there is little restraint in the economic data. This backdrop limits the upside potential for a non-yielding asset like gold, even if inflation shows signs of cooling.<\/p>\n
Therefore, our immediate focus should be on the binary risk of the CPI release this Friday. In the following weeks, we must then weigh the result of that report against the evolving geopolitical situation. A strategy that is nimble enough to pivot from trading economic data to trading headlines will be essential.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Gold edged higher above $5,050, supported by safe-haven demand amid US-Iran tensions, despite strong jobs data.<\/p>\n","protected":false},"author":62,"featured_media":16975,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-41653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41653","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=41653"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/41653\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16975"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=41653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=41653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=41653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}