FX.co ★ Gold Pares Some Gains After Strong Labor Data

Gold hovered near $5,060 per ounce after giving back earlier gains, as stronger US labor data dampened expectations for rapid Federal Reserve rate cuts, even while leaving the broader policy pivot narrative intact. US nonfarm payrolls increased by 130K in January, well above December’s revised 48K and exceeding forecasts of 70K. The unemployment rate declined to 4.3%, and average hourly earnings rose 0.4% month on month, lifting annual wage growth to 3.7%.

The firmer employment and wage data reduced the urgency for near-term easing, prompting traders to shift expectations for the next fully priced 25 bp cut to July from June. That repricing supported Treasury yields and capped additional gains in bullion. Even so, gold remains close to multi-week highs, as markets still anticipate policy easing later this year against a backdrop of moderating growth momentum, ongoing geopolitical risks, and steady central bank demand. In particular, the PBoC’s continued gold purchases underscore a structural underpinning for prices, despite the more resilient US labor backdrop.