Gold prices climbed above $5,070 per ounce on Tuesday, hovering near a two-week high, as a string of weaker-than-expected US economic data reinforced expectations of a more accommodative stance from the Federal Reserve later this year.
Recent activity indicators have already shifted interest-rate pricing. US retail sales for December stalled unexpectedly, while the GDP control group declined 0.1%. At the same time, job openings fell to their lowest level since 2020, and private payroll growth undershot market estimates. Together, these data points point to cooling demand and easing inflationary pressures in the US economy.
The softer macro backdrop has lowered rate expectations, strengthening the fundamental case for non-yielding assets such as gold. As bond yields and rate-cut odds adjust, bullion has found renewed support from shifting monetary policy expectations.
Beyond macro factors, official sector buying continues to provide a strong structural floor. China’s central bank extended its gold purchases for a fifteenth consecutive month in January, underlining sustained demand from reserve managers.
Geopolitical risks also remain supportive. Ongoing tensions between the US and Iran, despite tentative diplomatic efforts, have kept safe-haven demand intact, helping limit downside risks for gold prices.