Gold Prices Hold Steady Amid Jobs Data, Fed Policy Shifts, and Geopolitical Tensions

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On Tuesday, December 16, spot gold prices swung sharply before settling nearly flat. Prices dipped to $4,272 per ounce during the session, rebounded to $4,335, and closed at $4,302. This volatility was no accident—it reflected the combined influence of U.S. labor market data, Federal Reserve policy expectations, and ongoing geopolitical risks.

By Wednesday morning (December 17, Asia session), gold was trading narrowly around $4,306 per ounce, as investors braced for upcoming inflation data and central bank commentary.

Mixed U.S. Jobs Report: Growth Rebounds but Unemployment Rises

The November employment report was the key driver behind gold’s swings.

• Job growth: Nonfarm payrolls rose by 64,000, beating forecasts of 50,000. This marked a strong rebound from October’s steep decline of 105,000 jobs, largely caused by a 43‑day government shutdown that slashed federal employment by 162,000.
• Unemployment rate: Despite stronger hiring, unemployment climbed to 4.6%—the highest in over four years. Economists noted technical distortions, including survey disruptions from the shutdown and unusually high household survey rotation bias.
• Private sector resilience: Employers added an average of 75,000 jobs per month, signaling underlying labor market health. Yet uncertainty from President Trump’s aggressive trade policies has made businesses cautious. Tariffs have raised consumer prices, dampening spending, with October retail sales flatlining.

For gold traders, this mix of signals was tricky: stronger jobs limited dollar losses, but higher unemployment reinforced expectations of Fed rate cuts, fueling gold’s rebound from intraday lows.

Fed Policy Shift: Rate Cuts Boost Gold’s Appeal

Monetary policy remains the core driver of gold.

• Recent move: The Federal Open Market Committee cut rates by 25 basis points last week, lowering the benchmark to 3.50%–3.75%. Chair Jerome Powell struck a dovish tone, warning of “significant downside risks” in the labor market and citing revisions that suggest 911,000 fewer jobs were created over the past year than reported.
• Market expectations: Futures markets anticipate two more cuts in 2026, totaling 59 basis points. While January’s meeting carries only a 24% chance of easing, traders see April as more likely.
• Dollar and yields: The U.S. dollar index fell to a two‑month low of 98.22, briefly touching 97.87. Treasury yields also slipped, with the 10‑year at 4.155% and the 2‑year at 3.485%. Lower yields and a weaker dollar reduce gold’s opportunity cost, making it more attractive to global buyers.

Investors now await Thursday’s CPI and Friday’s PCE data. Softer inflation would cement rate‑cut expectations and potentially drive gold higher.

Geopolitical Risks: Russia–Ukraine Conflict Adds Safe‑Haven Demand

Beyond U.S. data, geopolitical tensions continue to underpin gold’s safe‑haven appeal.

• Battlefield updates: Russia claimed control of Novoplatonovka in Kharkiv and reported 154 strikes on Ukrainian positions. Ukraine countered with successful defenses, destroying tanks and artillery.
• Diplomatic maneuvering: Reports of possible peace talks briefly weighed on gold, but renewed conflict headlines lifted prices again. Germany’s Chancellor Merz suggested peacekeeping forces could confront Russian troops if necessary, while the U.S. pledged NATO‑style protection for Ukraine in the event of a ceasefire.
• Funding proposals: European leaders floated the idea of using frozen Russian assets to support Ukraine for at least two years, though Moscow has not agreed.

With tensions unresolved, any escalation could quickly boost gold demand. Wall Street’s decline on Tuesday reflected broader risk‑off sentiment, reinforcing gold’s role as a hedge.

Global Economic Weakness: PMI Signals Slowing Growth

The broader global backdrop also weighs on gold.

• PMI data: S&P Global’s December composite PMI fell to 53.0, the lowest since June, down from 54.2 in November. Service PMI dropped to 52.9, manufacturing to 51.8—both below expectations.
• Growth outlook: Chief economist Chris Williamson noted GDP growth is slowing to an annualized 2.5% pace in Q4, with weaker job creation and rising input costs. Service sector inflation pressures complicate the Fed’s easing path.
• Trade policy impact: Trump’s trade measures continue to cloud consumer spending and hiring decisions, adding uncertainty to the outlook.
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In this environment of slowing growth, geopolitical risk, and dovish monetary policy, gold’s role as a hedge against uncertainty becomes even more valuable.

Gold’s recent price action reflects a delicate balance of forces: mixed U.S. jobs data, dovish Fed signals, geopolitical tensions, and weakening global growth. With inflation data and Fed commentary on deck, volatility is likely to persist. For investors, gold remains a compelling safe‑haven asset in a world of rising uncertainty.