As markets anticipated critical data on U.S. nonfarm payrolls on Friday, gold prices held near seven-month highs, while copper prices reversed weekly losses due to the relaxation of additional anti-COVID measures in major importer China. After a series of abrupt rate hikes by the Federal Reserve in 2022, it is anticipated that U.S. nonfarm payrolls dropped marginally in December, signalling some softening in the labour market. Gold futures decreased 0.1% to $1,839.25 per ounce while spot gold increased 0.1% to $1,834.53 per ounce. Nevertheless, both assets were expected to rise 0.5% this week, marking their third consecutive week of gains.
Recent Fed hints that the Fed will likely raise interest rates at a slower pace in 2023 following a series of rapid increases in the previous year that helped to bolster gold prices. Bullion prices benefited from a rebound in safe-haven demand as a result of worries about an impending recession in 2023. However, central bank decision-makers signalled that they will probably keep rates higher for longer, with containing inflation their top priority.
Given that inflation is still significantly higher than the Fed’s goal rate of 2%, this has led to a great deal of ambiguity over the precise location of the U.S. rate peak. The Fed also made it clear that it will wait for the job market to cool off in order to tone down its hawkish rhetoric. However, despite challenges from slowing GDP, the U.S. labour market has so far managed to remain resilient. Gold outperformed other precious metals for the week thanks in large part to safe-haven demand. Silver prices lost almost 3% last week, while platinum futures were down 1.3%.
The action fuels hope for a further opening in China by pointing to the relaxation of additional anti-COVID restrictions. Following a more than 2% surge on Thursday, copper futures were steady at about $3.8252 per pound and on track to post gains for a third straight week. However, since December, when restrictions were loosened, China has seen an exceptional rise in COVID-19 cases. Analysts have cautioned that this pattern may postpone a more comprehensive reopening and increase short-term market volatility.