On Wednesday (January 8th), in the morning session of the Asian market, spot gold fluctuated narrowly and is currently trading around $2648.80 per ounce. Due to the uncertainty of Trump's policies and the volatile geopolitical situation, gold prices rose to around $2664.15 per ounce on Tuesday, close to the nearly three week high set last Friday. However, due to strong data from the US service industry and increased job vacancies, the possibility of a significant interest rate cut by the Federal Reserve decreased, and the US dollar index rebounded. The 10-year US Treasury yield reached a new high of over six months, narrowing the rise in gold prices and closing at around $2648.53 per ounce.

This trading day will usher in the US January ADP employment data (commonly known as "small non farm") and the minutes of the Federal Reserve's meeting. Investors need to focus on them. In addition, pay attention to the speech on economic prospects made by Federal Reserve Governor Waller at the OECD meeting.

US President elect Trump refused to rule out the possibility of military or economic action to acquire the Panama Canal and Greenland on Tuesday, as part of a broader expansionist agenda he has been pushing since winning the election on November 5th.

Trump, who will take office on January 20th, also proposed the idea of turning Canada into a state of the United States and stated that he will demand NATO allies to significantly increase defense spending and rename the Gulf of Mexico as the Gulf of the United States.

With only two weeks left before taking office, Trump has begun to outline an aggressive foreign policy that almost disregards diplomatic considerations or the concerns of American allies.

When asked at a press conference if he could assure the world that he would not use military or economic coercion in his attempts to control the Panama Canal and Greenland, Trump replied, "No, I cannot guarantee either of these. But I can say that for economic security, we need them

Trump criticized US spending on Canadian goods and military support for Canada, stating that the US has not benefited from it and calling the border between the two countries an "artificially drawn line".

He hinted that if Denmark resists his proposal to purchase Greenland, he will impose tariffs on Denmark. He said that Greenland is crucial to the national security of the United States. Shortly before Trump made the above remarks, his son Don Jr. arrived in Greenland for a private visit. Denmark has stated that Greenland is "not for sale".

Danish Prime Minister Mette Frederiksen responded to Trump's remarks late on Tuesday, saying, "I don't think using economic means to strike each other is a good development direction when we are close allies and partners

Retired American diplomat Daniel Fried, who currently works at the Atlantic Council think tank, said that Trump's remarks paint a picture of territorial expansion and national strength. Fried compared Trump to a "19th-century imperialist" and said that taking Greenland "would destroy NATO because it would make us no different from Russian President Putin".

Trump pointed out that the defense spending of NATO member countries should account for 5% of their gross domestic product (GDP), which "they can all afford". This is a significant increase from the current target of 2%. Trump has once again threatened that if Palestinian Hamas militants do not release the hostages they kidnapped from Israel on October 7, 2023 and are still holding in the Gaza Strip when he takes office, the "Middle East will collapse" and "this is not good for Hamas, to be frank, not good for anyone"

Trump was also asked if it was appropriate for Elon Musk to publicly comment on foreign affairs. In recent weeks, Musk has used his X platform to comment on European politics, including expressing support for the far right Alternative for Germany (AfD) party.

I can say that Elon (Musk) did a great job, he's a very smart person, "Trump said," I don't know those people you're talking about.

In terms of geopolitical situation, on January 6th local time, the Houthi armed forces in Yemen issued a statement stating that they had attacked the USS Harry Truman aircraft carrier in the Red Sea with two cruise missiles and four drones, and had thwarted the US military's plan to launch a large-scale airstrike on Yemen. In addition, the Houthis also launched attacks on Israeli targets in Jaffa and Ashkelon using drones.

On the afternoon of January 7th, the Russian Ministry of Defense announced that the "Central" formation of the Russian military had successfully repelled 12 Ukrainian counterattacks in the past 24 hours.

In terms of economic data, there was an unexpected increase in job vacancies in the United States in November, but recruitment activity has softened, suggesting that the labor market continues to slow down, but the pace of the slowdown may not push the Federal Reserve to cut interest rates urgently.

The Job Openings and Labor Mobility Survey (JOLTS) report released by the US Department of Labor on Tuesday also showed that layoffs remain low and workers are unwilling to resign.

There is no signal of a sudden collapse or imminent recession in the labor market here, "said Carl Weinberg, Chief Economist at High Frequency Economics. Instead, these data suggest that the economy is approaching full employment rather than moving away from it. The Federal Reserve will not rush to cut interest rates, and the labor market does not need to cut interest rates

The US Bureau of Labor Statistics stated that as of the last day of November, job vacancies measuring labor demand increased by 259000, reaching 8.098 million. The number of job vacancies in October has been revised to 7.839 million, compared to the previous value of 7.744 million. Economists previously predicted that the number of job vacancies in November would be 7.7 million.

Job vacancies have increased widely, but mainly concentrated in small businesses. The job vacancy rate has increased from 4.7% in October to 4.8%.

However, employers are still hesitant to add more workers after experiencing the recruitment boom during the post pandemic recovery period. Economists speculate that businesses may be watching, waiting for the policies of the incoming administration of President elect Trump to unfold. Trump has promised tax cuts, but will also impose or significantly increase tariffs on imported goods and expel millions of illegal immigrants.

The number of recruits decreased by 125000 to 5.269 million. This decline mainly occurred in companies with one to nine employees and companies with 50 to 249 employees. The recruitment rate decreased from 3.4% in October to 3.3%.

Employment growth may slow down in December, as the boost from hurricane disruptions and the end of strikes by factory workers at Boeing BA. N and another aerospace company diminishes.

A Reuters survey shows that non farm payroll jobs may increase by 160000 in December, with an increase of 227000 in November. The unemployment rate is expected to remain unchanged at 4.2%.

The number of layoffs in November was 1.765 million, with little change, but the number of layoffs in the accommodation and catering services industry surged by 102000. The low layoff rate supports the labor market and the overall economy.

A survey conducted by the Institute for Supply Management (ISM) on Tuesday showed that the indicator measuring input prices for service industry companies rose to its highest level in nearly two years in December. The hope for tax cuts and relaxed regulatory environment helped drive the December ISM Non Manufacturing Purchasing Managers' Index (PMI) from 52.1 in November to 54.1, but business statements indicate growing concerns about tariffs.

Peter Grant, Vice President and Senior Metals Strategist at Zaner Metals, said, "The stronger than expected job creation data and robust service sector ISM index both indicate a strong economy, but the threat of inflation persists, which will keep the Federal Reserve on hold until March

Dave Rosenberg, founder and president of Rosenberg Research, wrote in a report to clients: "The real surprise in the report is that the input price index jumped from 58.2 to 64.4 in December, the highest in 11 months - perhaps reflecting higher transportation or delivery costs during the holiday season. It can be said that this (ISM) report is enough to prompt the market to now expect the Federal Reserve to cut interest rates slightly more than once this year, and it has now been postponed from June to July. "

According to estimates from the London Stock Exchange Group (LSEG), after the data is released, the US interest rate futures market believes that the probability of suspending interest rate cuts this month is 95%, and the probability of interest rate cuts is 4.8%. The interest rate futures market also expects a rate cut of only 37 basis points in 2025, while according to the Federal Reserve's "dot matrix" interest rate forecast, it is expected to cut rates twice.

The US dollar rebounded 0.42% from its low in nearly two weeks on Tuesday, closing at 108.70. Investors are still evaluating whether President elect Trump's actual tariff policies are consistent with his tough rhetoric.

Market participants have been digesting the scenario that widespread tariffs could push up US inflation, potentially limiting the Fed's ability to cut interest rates and supporting the US dollar. But they want to know if officials are prepared to downplay some of Trump's campaign promises.

The yield of 10-year treasury bond rose 7.1 basis points to 4.687% on Tuesday, hitting 4.699% earlier, the highest since April 26.

Gennadiy Goldberg, head of US interest rate strategy at TD Securities, said, "The data gives the impression that the economy is re accelerating." Goldberg said that positive seasonal factors may make the data appear stronger than it actually is. "This is the real factor driving the trend of treasury bond -- the expectation that the situation may be improving significantly."

Next, people will pay attention to the December employment report released on Friday, searching for clues about the strength of the labor market. We are also waiting for Wednesday's ADP employment report and the minutes of the Federal Reserve's December meeting.

Daily chart of spot gold