Gold News: Trump Policy Risks Drive Prices Higher Despite Treasury Yield Spike

Gold Rises as Trump Policy Uncertainty Trumps Strong US Jobs Data

Gold prices rebounded on Friday as concerns over the incoming Trump administration’s economic policies boosted safe-haven demand, overshadowing a robust U.S. jobs report. Bullion held its ground despite a rally in the dollar and rising Treasury yields, underscoring its appeal in uncertain times.

On Friday, XAU/USD settled at $2689.375, up $19.035 or +0.71%.

Will Strong Jobs Data Force the Fed to Hold Rates Steady?

The December nonfarm payrolls report exceeded expectations, with 256,000 jobs added compared to economists’ forecasts of 160,000. The unemployment rate ticked down to 4.1%, while average hourly earnings increased by 0.3%. This robust performance reduced the likelihood of immediate Federal Reserve rate cuts, as futures markets now price in only one cut for 2025, likely mid-year.

U.S. Treasury yields surged in response, with the 10-year yield hitting 4.745%, the highest since late 2023, and the 2-year yield jumping more than 10 basis points to 4.369%. The strong labor market data strengthened the U.S. dollar, which notched a sixth consecutive weekly gain, further tightening conditions for gold.

Can Gold Resist the Pressure of a Rising Dollar?

Gold prices initially dipped after the stronger-than-expected jobs data but quickly rebounded. Concerns surrounding President-elect Donald Trump’s economic agenda have added a layer of uncertainty. Proposals like tariffs, tax cuts, and mass deportations are seen as potentially inflationary, which could complicate the Federal Reserve’s monetary policy plans.

This uncertainty has kept gold’s safe-haven appeal intact, with investors remaining cautious ahead of Trump’s January 20 inauguration. Despite the strength in the dollar and bond yields, gold has shown resilience, reflecting continued demand from risk-averse investors.

What’s Next for Gold as Trump’s Policies Unfold?

The upcoming implementation of Trump’s policies looms large over markets, and gold could benefit from heightened anxiety if inflationary pressures increase. For now, gold traders should monitor key developments around fiscal policy and Fed signals, as these will likely dictate the metal’s next move.

While dollar strength and rising yields may limit upside potential in the short term, gold’s safe-haven status could provide a bullish undertone in the face of uncertainty.

More Information in our Economic Calendar.