Spot gold in London surged rapidly during the early trading session on January 12, with intraday gains exceeding 1%. Geopolitical tensions flared up again over the weekend, boosting safe-haven demand, with short-term focus on the situation in Iran and US military plans regarding Greenland. On the macroeconomic front, the mixed US December employment data was released last Friday. This week, market attention turns to the US December CPI and PPI data, which may influence the Federal Reserve's interest rate cut path. Additionally, US government funding is nearing exhaustion again, raising the risk of another shutdown by the end of the month. Ongoing overseas uncertainties are likely to keep gold in the spotlight.
US seasonally adjusted non-farm payrolls for December 2025 increased by 50,000, falling short of the expected 60,000 and the previous figure of 64,000. The unemployment rate was 4.4%, compared to an expectation of 4.5% and a prior rate of 4.6%. Furthermore, the revised figures for October showed non-farm payrolls adjusted down to -173,000 from -105,000, while November's figure was revised down to 56,000 from 64,000. The drop in the unemployment rate temporarily alleviated the most severe concerns about a deteriorating labor market. Separately, a Federal Reserve report indicated that consumers expect prices to rise by 3.4% over the next year, up from 3.2% in November. Significant divergence persists among Fed officials, with some more concerned about inflation and others viewing rising unemployment as the greater risk, leaving expectations for a rate cut at the end-of-month Fed meeting highly uncertain.
On the geopolitical front, the White House announced it has begun globally marketing Venezuelan oil, with the US Energy Secretary stating control over Venezuelan oil sales will be maintained "indefinitely." US Treasury Secretary Besant indicated that the US will lift some sanctions on Venezuelan entities. Last week, the US suggested that its military budget for the 2027 fiscal year should increase to $1.5 trillion, equivalent to a more than 50% rise from this year's budget. During the week, the US showed significant interest in discussing options, including military ones, regarding Greenland. Markets focused on the situation in Iran over the weekend.
In summary, the probability of a Fed rate cut in January remains low, but as market expectations were already subdued, the impact on gold is limited. However, geopolitical issues have become a short-term focus at the beginning of 2026, starting with US-Venezuela tensions. Provocative US actions concerning Greenland and heightened focus on Iran have renewed global investor unease about frequent geopolitical conflicts, making it difficult for gold's appeal to diminish.
Comments