On Tuesday morning (January 7th), spot gold fluctuated narrowly in the Asian market, currently trading around $2635 per ounce. The gold price fell slightly on Monday. The Federal Reserve recently hinted that it would slow down the pace of interest rate reduction in 2025. The yield of US treasury bond bonds climbed to a new high since May. The gold price once hit a new low of 2614.69 US dollars/ounce in three trading days. However, there are conflicting reports about how radical the tariff plan of President elect Trump will be after taking office. The US dollar index fell to a new low for more than a week, and the gold price recovered to close at 2635.87 US dollars/ounce.

The yield of the 10-year treasury bond bond hit its highest level since May on Monday, and the yield of the 30-year treasury bond bond hit its highest level in 14 months. The US Treasury Department will auction long-term treasury bond bonds in the next two days.

The US Treasury Department auctioned US $58 billion of three-year treasury bond bonds on Monday, with weak demand. The winning interest rate was 4.332%, 1 basis point higher than the yield of the secondary market before the auction. The bidding multiple is 2.62.

On Tuesday, $39 billion of 10-year treasury bond will be auctioned, and on Wednesday, $22 billion of 30-year treasury bond will be auctioned.

After a report hinted that the tariffs planned by President elect Trump would not be as aggressive as previously feared, yields briefly fell.

The Washington Post reported earlier that Trump's aides are studying some tariff plans that will apply to all countries, but only cover certain industries deemed crucial to national or economic security. Trump subsequently denied the report.

Analysts believe that Trump is expected to cut taxes and relax business regulations, which will promote economic growth. Other policies, including the crackdown on illegal immigration and the imposition of tariffs, are expected to stimulate inflation, which could have a long-term drag on the economy.

However, some well-known economists, including former US presidential advisors, have stated that Trump's plan may not push inflation up as early analysis suggested.

Traders are not sure what policies are likely to be introduced and how they will affect US debt.

Will Compernolle, macro strategist of FHN Financial, said: "There is great uncertainty about what will happen after the new president takes office and gets the opportunity of budget reconciliation bill. What impact will this have on the issuance of treasury bond? I think no one really knows what the net impact will be, but the upward risk of interest rate is greater."

The yield on the 10-year US treasury bond bond rose 1.7 basis points to 4.612% on Monday. During the trading session, the yield reached its highest level since May 2nd, reaching 4.644%.

With the annual inflation rate still above the target of 2%, it is expected that the Federal Reserve will reduce the number of interest rate cuts this year. Federal Reserve Governor Cook said on Monday that given the robust economy and more sticky inflation than previously expected, the Fed can be cautious about further interest rate cuts.

The economic data to be released this week includes Friday's employment report, which is expected to show 154000 new jobs added in December.

Nitesh Shah, commodity strategist at WisdomTree, said: "The yield of treasury bond bonds rebounded again, putting pressure on gold."

However, Shah said, "Based on the 'consensus' economic view of the devaluation of the US dollar and the decline in the yield of treasury bond bonds, we expect the gold price to reach US $3050/ounce by the end of the year. Further escalation of tensions in the Middle East may expose our forecast to upside risks“

The US dollar index continued to decline by 1% on Monday from its highest level in over two years hit last Thursday, with a intraday low of 107.74, a new low since December 30th. The December 30th low of 107.73 is also a nearly two-week low.

After Trump denied the Washington Post's report on his Truth Social platform, the decline of the US dollar significantly narrowed. The closing price was 108.24, which is also one of the reasons why gold prices are still falling.

Karl Schamotta, Chief Market Strategist at Corpay, said, "The reality is that Trump's views on Truth Social will drive currency market volatility for some time, and Monday's reaction indicates potential dynamics

Schamotta added: "The consensus of the market is that Trump will make more noise than sound. Any news confirming this view will boost the rise of risky assets and the decline of the yield of the US dollar and US treasury bond bonds. However, the reality is that downside risks still exist and there is no clear end point."

The speech by Federal Reserve Governor Cook also helped to curb the decline of the US dollar. Several Federal Reserve decision-makers will give speeches this week, and their statements may be similar to recent statements from other officials, suggesting that it is still necessary to address stubborn inflation.

The data released by the US government on Monday showed that due to weak demand for commercial aircraft, new orders for US made goods decreased in November, and corporate equipment spending seemed to slow down in the fourth quarter.

Market participants are now waiting for Friday's US employment report, which may help provide more information for the Federal Reserve's future policy path.

The Citigroup team believes that the number of new jobs added in the United States in December will slow down to 120000, lower than the 227000 in November, and expects the unemployment rate to rise from 4.2% in November to 4.4%. This is more pessimistic than other forecasts collected by The Wall Street Journal so far, which generally believed that the United States would add 155000 new jobs and the unemployment rate would remain stable at 4.2%.

Citigroup believes that the unemployment rate will continue to rise to 4.5% in the coming months, which will lead to market expectations that the Federal Reserve will conduct more interest rate cuts in 2025, exceeding current expectations

Shaun Osborne, Chief Foreign Exchange Strategist at Scotiabank, said, "The US dollar index may see a correction of 2%, 3%, or 4% in the near future, but we need a stronger feeling to push it forward, either because the European economy is performing better, so we see European interest rates further rising, or tariff expectations further easing

On this trading day, pay attention to the US trade account in November, the Eurozone CPI data in December, the US ISM non manufacturing PMI data in December, and the US JOLTs vacancy data in November. Additionally, pay attention to the speech of Richmond Fed Chairman Barkin, geopolitical news, and Trump related updates.

In addition, the ADP employment report and the minutes of the latest policy meeting of the Federal Reserve will be released on Wednesday, and investors need to pay attention to changes in market expectations.