On Tuesday morning (January 14th), spot gold fluctuated narrowly in the Asian market, currently trading around $2666.66 per ounce. Gold prices fell nearly $30 on Monday from a one month high hit last Friday, with a intraday low of $2656.73 per ounce and closing at $2662.83 per ounce. Last week's strong employment report consolidated expectations that the Federal Reserve would cautiously cut interest rates this year, and the US dollar surged to its highest level in over two years. US bond yields hit an eight month high, putting gold prices at the 2700 mark. In addition, a breakthrough in Gaza ceasefire mediation also suppressed safe haven demand for gold.

Bob Haberkorn, senior market strategist of RJO Futures, said: "We saw a better than expected US employment report, which made the yield of US dollars and US treasury bond bonds rise... The fall of (gold) is some follow-up to the stronger than expected report."

Haberkorn added that after gold performed well last week, there were also some profit taking activities.

The US employment report released last Friday highlighted the strong momentum of the economy and made the outlook for the Federal Reserve uncertain. The US dollar index rose to its highest level of 110.17 since November 2022 on Monday, but gave up its gains in late trading, with a weekly report of 109.59 and a decline of about 0.05%.

Trump will be sworn in as the President of the United States next week. The tariffs and trade protectionism policies he proposed are expected to stimulate inflation and may trigger a trade war, thereby increasing the attractiveness of gold as a safe haven asset.

Insiders have revealed that US President elect Donald Trump's economic team is discussing a gradual increase in tariffs on a monthly basis to increase bargaining power while also trying to avoid soaring inflation. This has slightly cooled down the market's concerns.

According to informed sources, one idea is to establish a progressive tariff schedule, with monthly increases of approximately 2% to 5%. This plan will also rely on the administrative powers granted by the International Emergency Economic Powers Act.

Insiders say that the proposal is still in its early stages and has not yet been submitted to Trump himself. This indicates that the plan is in the early stages of development. The advisors participating in the plan include Scott Bessent, a candidate for Treasury Secretary, Kevin Hassett, a candidate for Director of the National Economic Council, and Stephen Milan, a candidate for Chairman of the National Economic Advisory Council.

The yield of US 10-year treasury bond bonds soared to a 14 month high in volatile trading on Monday, mainly driven by the strong labor market and persistent high inflation, which will force the Federal Reserve to suspend the easing cycle this year. The yield fell slightly at the end of the trading session.

The uncertainty surrounding the incoming Trump government's tariff, tax cut and immigration policies has also dragged down the price of treasury bond, and the price of treasury bond is inversely related to the yield.

Investors also covered their short positions at the beginning of Monday's session, which temporarily pushed up the price of treasury bond bonds and made yields slightly lower.

Due to Monday being a public holiday in Japan, the trading volume was lower than usual, so the trend may be somewhat exaggerated. Japan is the largest holder of US Treasury bonds outside of the United States.

Everyone is reassessing their views on the strength of the US economy, "said Jim Barnes, head of fixed income at Bryn Mawr Trust." Given this, the market has ruled out the possibility of interest rate cuts this year and to some extent questioned what level policy rates need to reach in order to slow down economic growth

In Monday's trading session in New York, the 10-year yield rose to 4.799%, the highest since November 2023, and closed up 2.2 basis points at 4.796%.

In addition to economic data, the market is also paying attention to President elect Trump's inauguration ceremony on January 20th. Market participants said that until Trump's policy is clear, investors will continue to sell US treasury bond bonds, further raising the yield of treasury bond bonds.

We will learn more about the situation in about a week or ten days, as we will see the White House issue an executive order, "said Stan Shipley, Managing Director and Fixed Income Strategist of Evercore ISI in New York

He added: "But now, with strong economic growth, inflation seems likely to rise slightly, and uncertainty, this is not a good omen for treasury bond."

Nowadays, people's uncertainty about the future has increased, "Bryn Mawr's Barnes said when talking about the impact of term premiums on the market." People hope to compensate for this uncertainty through additional yields

According to the London Stock Exchange Group (LSEG), the US interest rate futures market on Monday expects a rate cut of only 27 basis points this year, or one rate cut, most likely in September or October. The interest rate futures market on Monday also fluctuated, indicating that there will be a rate cut or no rate cut in 2025.

This is far from the Federal Reserve's 2025 interest rate forecast or matrix, in which the Fed is expected to cut interest rates twice.

Investors are currently monitoring this week's US inflation and retail sales data to find clues on whether the US economy will continue to show resilient growth. Goldman Sachs predicts that the overall consumer price index will rise by 0.4% in December and 2.9% in 2024, reflecting the increase in food and energy prices.

On this trading day, the December PPI data for the United States will be released, and several Federal Reserve officials will give speeches. Investors need to pay attention to this. In addition, investors need to pay attention to news related to the geopolitical situation.

An official familiar with the negotiations said that the mediator provided Israel and Hamas with a final draft of an agreement to end the Gaza war on Monday, following a "breakthrough" in talks attended by Biden and Trump envoys after midnight. The official stated that during the talks held in Doha, Qatar submitted a draft agreement text for a ceasefire and the release of hostages to both sides, with the participation of the heads of Israel's Mossad and security agency, Simbel, as well as the Qatari head of state.

The official said that Witkov, who will serve as the Middle East envoy after Trump takes office next week, attended the talks. A US source said that outgoing Biden envoy McGurk also attended the talks. Officials said, 'The next 24 hours will be the key to reaching an agreement,' and he referred to the draft as the result of a breakthrough made early Monday morning.

The office of the Emir of Qatar (Head of State) Tamim stated that Tamim received a Hamas delegation led by senior official Khalil al Hayya to discuss ceasefire negotiations.

Israeli Kan Radio reported on Monday, citing an Israeli official, that both Israel and the Hamas delegation in Qatar have received a draft, and the Israeli delegation has also informed Israeli leaders of the situation. The foreign ministries of Israel, Hamas, and Qatar did not respond to requests for verification or comment.

Although officials from both sides have not confirmed the final draft, they both claim that progress has been made in the talks. A Hamas official said on Monday, "Progress has been made in negotiations on some core issues, and we are working hard to complete the remaining work as soon as possible." Due to the sensitivity of the matter, the official requested anonymity. Israeli Foreign Minister Saar said that Biden and Trump's teams are coordinating negotiations.

Sal said, "With progress, it looks much better than before. I want to thank our American friends for their tremendous efforts in reaching the hostage agreement

The United States, Qatar, and Egypt have been negotiating for over a year to end the Gaza War, but so far there have been no results. An Egyptian security official stated that the draft sent to the warring parties does not include a final agreement, but is aimed at resolving unresolved issues that hindered previous negotiations.

Israel's Channel 12 reported that Israeli government agencies have been informed to prepare for the reception of weak and sick hostages. A spokesperson for the Israeli Ministry of Health did not immediately respond to a request for comment.

Trump's inauguration ceremony on January 20th is widely regarded as the de facto deadline in the region. The elected president previously stated that unless Hamas releases hostages before he takes office, he will "pay a hellish price," and outgoing President Biden has also strongly demanded an agreement before he leaves office.