AGE Daily Gold Update

AGE Daily Gold Update presents a recap on today's action in the precious metals markets. View archives.

1/13/2025: Gold falls on hawkish rate view

Source: Bill Musgrave, American Gold Exchange

Austin — New York spot gold fell 1.3% to close under $2,674 as traders took profits from last week’s 2.4% rally after Treasury yields and the dollar climbed on expectations that the Fed will make fewer rate cuts this year. Silver dropped 3.2% to finish at $30.09 an ounce.

Surprisingly strong US job growth in December, which saw nonfarm payrolls adding 256,000 new jobs and the unemployment rate dropping to 4.1%, has caused the markets to reassess what the Fed might do about interest rates this year. Fed fund futures now project just 25 basis points in cuts for the year, down from 50 basis points a week ago.

In addition, the tariff policies of the incoming Trump administration, if enacted, promise to raise prices on US consumers and further undermine the Fed’s rate-cut cycle. While gold is often sought as a hedge against also of purchasing power during inflationary times, it also comes under pressure from high interest rates and a strong dollar.

This week’s release of the December CPI and retail sales data should give further clues about the course of the economy and interest rates.

Benchmark 10-year Treasury yields crept near 4.8% on the hawkish rate view, weighing on gold by increasing the opportunity cost for holding it instead of bonds as a safe-haven asset.

Tracking with yields, the dollar rose 0.3% to a two-year higher against major rivals. A stronger buck is a headwind for gold and other commodities because it makes them pricier in other currencies, curtailing demand overseas.

Platinum and palladium lost 2% and 1.7%, respectively.

At the New York spot close: gold fell $35 to $2,673.50; silver slid $1 to $30.09; platinum dropped $20 to $962.10; and palladium shed $16.50 to $945 an ounce.