At the beginning of the Asian market on Friday (December 27th), spot gold fluctuated narrowly and is currently trading around $2632.87 per ounce. Gold prices rose in light trading after the Christmas holiday on Thursday, reaching a near week high of $2639.02 per ounce and closing at $2633.49 per ounce. Driven by safe haven demand, the market is waiting for signals from the incoming Trump administration's US economy and the Federal Reserve's 2025 interest rate strategy.

Daniel Pavilonis, Senior Market Strategist at RJO Futures, said, "Some of the gains in gold are related to events that occurred in Ukraine, where Russia attacked Ukraine's power system

US President Biden demanded on Wednesday that the US Department of Defense continue to increase its efforts to transport weapons to Ukraine, condemning Russia's attacks on some Ukrainian cities and energy systems during Christmas.

Four sources familiar with the preliminary results of the investigation into Azerbaijan said on Thursday that the Azerbaijan Airlines plane that crashed in Kazakhstan was shot down by a Russian air defense system, resulting in 38 deaths.

Flight J2-8243 crashed near the city of Aktau in Kazakhstan on Wednesday, after the plane diverted from a southern region of Russia where Moscow had repeatedly used air defense systems to counter Ukrainian drone attacks.

Russian Foreign Minister Sergei Lavrov stated on Thursday that Ukraine has repeatedly used Western missiles and drones to attack civilian targets within Russian territory, and Moscow will respond to this.

He added that Russia only targets military facilities and infrastructure, and 'striking civilian targets does not comply with our rules'.

The acting governor of Kursk Oblast in Russia announced on Wednesday that Ukrainian shelling resulted in four deaths and five injuries in the town of Ligov in the region.

In terms of the geopolitical situation in the Middle East, Gaza authorities stated that Israel's airstrike on Thursday resulted in the death of five Palestinian journalists in a car outside a hospital, but the Israeli military claimed that the victims were Islamic Jihad militants posing as media workers.

Medical staff said that including these five people, at least 31 people were killed in Israel's pre dawn airstrikes on Palestinian enclaves.

Pavilonis said, 'Central banks around the world will still buy gold, and as inflation continues, you may see an increase in retail demand for gold,' adding that gold prices are expected to surpass $3000 next year.

Gold is considered a hedge against geopolitical turmoil and inflation, but rising interest rates have reduced the attractiveness of holding this non yield asset. So far this year, gold has risen by 28% and reached a historical high of $2790.15 on October 31st.

In terms of economic data, the initial jobless claims in the United States fell to the lowest level in a month last week, which is in line with the cooling but still healthy state of the US labor market. This may prevent Federal Reserve officials from further cutting interest rates in the short term.

According to data from the US Department of Labor on Thursday, the number of initial state unemployment claims decreased by 1000 in the week ending December 21, to 219000 after seasonal adjustment. Economists previously predicted 224000 people.

Since the Thanksgiving holiday, the unemployment benefit data has been fluctuating, which economists believe is due to seasonal issues caused by an increase in the number of temporary workers recruited by companies for the holiday season. However, the latest number of initial jobless claims still meets the average level of the past year (slightly higher than 220000), and there is almost no sign of an increase, with layoffs still being suppressed.

At the same time, the unemployed find it difficult to find new jobs and stay longer on the list of recipients of unemployment benefits, leading to an increase in the number of people renewing their claims for unemployment benefits.

The report shows that in the week ending December 14th, after seasonal adjustment, the number of people applying for unemployment benefits increased by 46000 to 1.91 million, the highest level since November 2021. Economists had previously estimated that 1.88 million people would continue to apply for unemployment benefits.

The average duration of unemployment in November was 23.7 weeks, the longest since April 2022, and steadily rising from less than 20 weeks in April this year. However, the number of people applying for unemployment benefits has only increased by about 100000 compared to a year ago, and although it has continued to rise in the past 12 months, it has not shown the signs of a sharp increase that usually occurs in a deteriorating labor market so far.

The above extension of unemployment benefits data is within the survey period of the government's investigation into the December non farm employment report to be released on January 10, suggesting that the pace of recruitment this month may slow down compared to the 227000 new jobs added in November.

According to various economic data released, the recruitment speed has significantly slowed down, which has driven the trend of increasing the number of applications for unemployment benefits, "said Thomas Simons, a US economist at Jefferies, in a report. However, the data also shows that the pace of layoffs has not correspondingly accelerated. This is unusual because there is usually a reverse correlation between recruitment and layoff rates, but the current situation reflects employers acknowledging that labor supply is scarce and may become even scarcer, making it more valuable to retain employees than in the past

Simons currently predicts that the December employment report will show 170000 new job opportunities, but he stated that he will adjust this forecast as new information is released in the coming weeks.

The latest unemployment data itself is unlikely to affect the thinking of Federal Reserve officials. The Fed lowered interest rates for the third time since September last week, but officials hinted that the risks between the job market and inflation are seen as roughly balanced and may pause further rate cuts.

The growing doubts about how many times the Federal Reserve can cut interest rates next year have intensified the rise of the US dollar in the past few weeks.

The current pricing of money market traders is to cut interest rates by 38 basis points next year, which means they believe the likelihood of the Federal Reserve cutting interest rates by 25 basis points for the second time is about 50%.

The US dollar index and US Treasury yields rose and fell on Thursday. The US dollar index rose 0.2% and reached a one week high of 108.30 during Thursday's trading session, but it gave up its gains and closed near 108.09, close to being flat. The yield of the US 10-year treasury bond bond once hit a new half year high of 4.643% in the middle of trading on Thursday, giving up all the gains in the closing, closing at around 4.458%, close to flat. From a technical perspective, the short-term downward pressure on the US dollar index and US Treasury yields has increased, which is expected to provide further upward opportunities for gold prices in the short term.

There is relatively little economic data on this trading day, and investors need to pay close attention to news related to the geopolitical situation and Trump's updates.