Gold prices experienced a moderate decline on Thursday, with the February futures contract settling at $2,653.90, down $20.30 or 0.76%. The precious metal's potential losses were mitigated by a concurrent weakening of the US dollar, which dropped 0.58% to 105.692 on the index.
The market's attention is now firmly fixed on the upcoming December jobs report, a crucial economic indicator that could significantly influence the Federal Reserve's monetary policy decisions. The Labor Department's latest weekly jobless claims report provides a preliminary glimpse into the labor market's health, showing a modest increase of 9,000 unemployment applicants, bringing the total first-time claims to 224,000 for the week ending November 30.
Economists anticipate tomorrow's nonfarm payrolls report will reveal approximately 200,000 new jobs added in November. This projection is critical, as it will likely shape the Federal Reserve's approach to interest rate normalization at its final Federal Open Market Committee (FOMC) meeting on December 18.
According to the CME's FedWatch tool, there is a substantial 70.1% probability that the Fed will implement a 25-basis-point rate cut. This potential reduction would mark the third rate cut of the year, following previous cuts of 50 and 25 basis points. These cuts represent a significant shift from the Fed's aggressive stance during the height of inflation in March 2022, when rates were elevated to combat price pressures exceeding 8.5%.
If the anticipated rate cut materializes, the Fed's benchmark overnight lending rate would be reduced by a full percentage point, bringing it to a range between 4.25% and 4.50%. This strategic adjustment reflects the central bank's ongoing efforts to balance economic growth with inflation control.
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