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Gold price (XAU/USD) trades in positive territory near $5,060 during the early Asian session on Thursday. The precious metal edges higher despite stronger-than-expected US employment data. The release of the US Consumer Price Index (CPI) inflation report will take center stage later on Friday.
The rally of the yellow metal is bolstered by safe-haven demand amid uncertainty and tensions between the United States (US) and Iran. US President Donald Trump said he insisted talks with Iran continue during a meeting with Israeli Prime Minister Benjamin Netanyahu. Trump also warned that he may take action against Tehran if a nuclear deal is not reached.
US Nonfarm Payrolls (NFP) increased by 130,000 in January, above the market consensus of 70,000, according to the Bureau of Labor Statistics on Wednesday. This figure was an improvement over December, which saw a gain of 48,000 after a slight downward revision.
Meanwhile, the Unemployment Rate edged lower to 4.3% in January from 4.4% in December, below the forecast to stay unchanged at 4.4%. The upbeat report provides some relief to concerns about the state of the US labor market, which could lift the US Dollar (USD) and weigh on the USD-denominated commodity price.
Federal Reserve (Fed) Bank of Kansas City President Jeff Schmid said on Wednesday that the central bank needs to keep rates at restrictive levels to continue putting downward pressure on inflation and added he’s not seeing many indications of restraint in the economic data.
Traders will keep an eye on the US CPI report on Friday, which might offer some clues about the interest rate path. The headline and core CPI are expected to show a rise of 2.5% YoY in January. Any signs of softer inflation could reduce the chance that the US central bank will see a need to cut interest rates again by midyear. This could undermine the non-yielding asset, such as Gold.
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