Source: Jinshi Data

On Thursday, gold prices closed near a four-week high, but at the same time, the two major headwinds for gold remain: the USD continues to strengthen and US Treasury yields are rising. Some Analysts point out that fiscal worries may be prompting investors to seek safe-haven assets.

On Friday, gold hovered around the $2680 mark, expected to rise over 1% this week. Traders are waiting for the release of US employment data, which will affect the Federal Reserve's policy outlook for the year.

The market expects the USA's data for December last year.Non-farm Employment DataThe slowdown in job growth will be displayed, but it remains healthy, and economists expect this growth pattern to continue into 2025. Federal Reserve officials have hinted that they may maintain interest rates at current levels for an extended period, only lowering them again when inflation shows significant cooling.

Brien Lundin, editor of the Gold Newsletter, stated, "The strong dollar, rising U.S. Treasury yields, and increasing gold prices all indicate global concerns about the USA's financial condition. Given that the USA's debt and deficit are at such high levels relative to GDP, the 'debt market vigilantes' are demanding higher returns to compensate for the risks of holding U.S. bonds."

Lundin said, "The astonishing rise in the 10-year U.S. Treasury yield began with the Federal Reserve's interest rate cuts, which is no coincidence. The Fed may be losing some control over interest rates, which is concerning in itself and exacerbates the rise in U.S. Treasury yields."

Meanwhile, despite concerns over the USA's finances, the dollar is strengthening because, "it represents a safe-haven asset in difficult times, and also due to higher U.S. Treasury yields," said Lundin.

Typically, when U.S. Treasury yields rise and the dollar appreciates, gold prices come under pressure. This week, the USD is expected to achieve its sixth consecutive week of increases. Meanwhile, the 10-year U.S. Treasury yield is nearing its highest level since April of last year.

Gold was one of the best-performing major CSI Commodity Equity Index last year, rising 27% as the Federal Reserve cut interest rates, central banks increased their Shareholding in Gold, and investors sought safe havens amid geopolitical tensions, reaching new historical highs. As USA President-elect Trump is set to be inaugurated on January 20, investors are also weighing the potential for a trade war or other tensions that could disrupt markets and boost demand for safe havens.

Kaynat Chainwala, an Analyst at Kotak Securities, stated in a report, "Despite rising global yields, Gold continues to rise." She mentioned that traders are concerned that stimulus measures, fiscal reforms, and trade tariffs might lead to inflation rising.

Lundin stated that gold "is undoubtedly the ultimate safe-haven asset, and is thus being increasingly bought by investors, from central banks to individual investors." He said:

The performance of Gold in the so-called headwinds of rising USA Treasury yields and a strengthening USD is impressive, and this performance may continue.

编辑/jayden