Global Gold Prices Slip as US Economic Data and Rising Bond Yields Pressure Market (Feb 12)
Global gold prices edged lower on Thursday (Feb 12), weighed down by rising US Treasury yields and cautious investor sentiment ahead of additional US economic data releases.
According to Reuters, spot gold declined 0.44% to US$5,058.49, as market participants focused on a fresh round of economic reports from the United States.
Strong US Labor Market Reduces Rate Cut Expectations
The latest US employment report showed job growth exceeding expectations in January, while the unemployment rate dipped slightly — signaling continued stability in the labor market.
This data reinforced the view that the Federal Reserve may have room to keep interest rates higher for longer, reducing the appeal of non-yielding assets such as gold.
Thomas Mathews, Head of Asia-Pacific Markets at Capital Economics, said the broader picture suggests that the US labor market is gradually tightening.
“If that is the case, investors may be overly optimistic about further monetary easing, and the bond market could still face additional pressure,” Mathews noted.
Bond Yields Rise, Dollar Strengthens
Market expectations for at least a 25-basis-point rate cut at next month’s meeting had climbed to around 20%. However, those expectations dropped sharply following the strong employment data. Despite this, traders still anticipate at least two rate cuts later this year.
In the bond market, the US two-year Treasury yield stood at approximately 3.512%, while the benchmark 10-year yield hovered near 4.186%.
The increase in yields helped support the US dollar, which had previously been under pressure. A stronger dollar typically weighs on gold prices, as it makes the precious metal more expensive for holders of other currencies.
However, analysts believe ongoing uncertainty surrounding central bank independence and policy risks continues to cloud the outlook. As a result, the US dollar may require stronger economic surprises to sustain its upward momentum.
Focus Shifts to US Inflation Data
Investor attention now turns to the upcoming US inflation data scheduled for Friday. The report is expected to be a key test for market expectations regarding the timing and magnitude of future Federal Reserve rate cuts.
The inflation figures could play a decisive role in determining the short-term direction of gold prices.