Gold Ignores Fed, Rockets Higher

Gold prices continue to defy gravity even as the Federal Reserve points to robust U.S. job growth as a reason to maintain higher interest rates. Before the weekend, gold extended a four-day winning streak despite the dollar and treasury yields surging following a surprisingly upbeat December jobs report.

Fed Leans on Labour Data to Justify Rate Stance

According to the U.S. Bureau of Labor Statistics, employment rose by 256K jobs in December, considerably above the consensus estimate of 153K. November’s gain was also solid at 227K. This positive data handed the Federal Reserve more justification to resist calls for interest rate cuts. Typically, strong labour market numbers bolster the U.S. Dollar and bond yields, making gold less appealing. That did not happen this time. That dynamic appears to be taking a back seat as broader market anxieties keep demand for the precious metal strong.

Gold’s Safe-Haven Appeal Outshines Dollar Strength

In a testament to gold’s enduring safe-haven allure, prices have pushed higher. Saxo Bank noted, “Despite the headwinds from dollar and Treasury yield strength, investors are turning to tangible assets to hedge against persistent inflation risks and mounting fiscal debt concerns, and the risk of tariffs uprooting normal trading dynamics. This trend is further supported by increased hoarding of physical metals by Chinese traders, who are wary of potential further depreciation of the yuan.”

Bullish Breakout from a Symmetrical Triangle

Technically, gold’s price action has been equally impressive. The precious metal just registered a bullish breakout on its weekly candle chart, having formed a symmetrical triangle pattern in recent weeks. A symmetrical triangle often indicates a continuation of the prevailing trend, and in gold’s case, that trend has been firmly upward. Traders are now eyeing potential higher targets, with many technical analysts arguing that a confirmed breakout from this pattern often foreshadows sustained gains.

Gold Price Outlook

With inflation remaining sticky and growing concerns about global trade imbalances, gold’s upward momentum might persist despite the looming threat of a more hawkish monetary policy. As investors look for safe havens amidst tightening credit conditions and fiscal uncertainties, the metal’s appeal stands out. If job numbers remain strong, the Federal Reserve may see little reason to pivot from its cautious stance, but gold’s trajectory suggests that safe-haven demand could still override the traditional headwinds posed by a strong dollar and higher yields.