- Gold price kicks off the new week on a positive note despite the stronger US Dollar.
- The US Nonfarm Payrolls (NFP) report came in better than expected; the Unemployment Rate was unchanged in January.
- The rising geopolitical tensions might lift traditional assets like gold.
- Investors await Fed Chair Jerome Powell’s speech, Chinese Caixin Services PMI, and US ISM Services PMI.
Gold price (XAU/USD) holds positive ground during the early Asian session on Monday. The upbeat US jobs report dampened hopes for a March rate cut, which weighs on the yellow metal. Nevertheless, the downside of the gold price might be limited amid the ongoing geopolitical tensions in the Middle East. At press time, the gold price is trading at $2,038, gaining 0.12% on the day.
On Friday, the US Nonfarm Payrolls (NFP) report came in better than expected, surging to 353K in January from 333K in December (revised up from 216K). The Unemployment Rate was unchanged at 3.7%. Finally, wage growth is firming, with Average Hourly Earnings growing 4.5% YoY in January from 4.4% in December. The Greenback attracted some buyers following the job reports. Traders reduced their bets on an interest rate cut in May, and the probability of a March rate cut has dropped to 19%, compared to 38% just a day ago, according to the CME FedWatch tool. It’s worth noting that the higher-for-longer rate narrative reduces gold’s appeal since it provides no yield.
Nonetheless, the United States and the United Kingdom launched large-scale military attacks on Saturday against multiple sites in Yemen controlled by Houthi militants as the Biden administration continued its Middle Eastern revenge campaign against Iran-backed rebels, according to the New York Times. The escalating geopolitical tensions might boost traditional assets like gold.
Looking ahead, Fed Chair Jerome Powell is set to speak on late Sunday and will be closely watched by traders. Market players will keep an eye on the Chinese Caixin Services PMI and US ISM Services PMI data on Monday. These events could give a clear direction to the gold price.
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