Gold prices weakened on Wednesday (January 7) after briefly touching their highest level in more than a week earlier in the session. Pressure arose as investors opted to take profits after a brief rally, while the market began to focus on a series of US jobs data that could alter expectations for the Fed's interest rate direction. In recent trading, spot gold fell 0.8% to $4,460/oz.

Gold's weakness was also triggered by the strengthening US dollar, which remained near its highest level in more than two weeks. When the dollar strengthens, gold priced in USD automatically becomes more expensive for buyers compared to other currencies—making demand tend to be restrained. This condition puts pressure on the entire precious metals complex, not just gold.

Even so, market expectations remain tilted toward an easing scenario: investors believe the Fed could potentially cut interest rates at least two times this year. The market is now awaiting clues from employment data, including the ADP and JOLTS reports, which are released earlier, before the peak Non-Farm Payrolls (NFP) report on Friday—which usually triggers volatility in gold and the dollar.

Comments from Fed officials added spice. Fed Governor Stephen Miran believes more aggressive interest rate cuts are needed to keep the economy moving. In theory, the prospect of lower interest rates typically supports gold because it offers no yield. However, in the short term, the market remains sensitive to "data strength"—if US data is too strong, the likelihood of a cut could be dampened, pressuring gold.

Beyond data, geopolitical factors also shape sentiment. A deal regarding Venezuelan oil exports to the US is seen as potentially shifting some supply away from China, adding new dynamics to the commodity market. Meanwhile, other precious metals also weakened: silver fell 2.5% to $79.27/oz, platinum fell 6.2% to $2,291.24/oz, and palladium fell 4.7% to $1,736.93/oz. (Arl)

Source: Newsmaker.id