On Friday (January 17th) during the Asian session, spot gold fluctuated narrowly and is currently trading around $2713.55 per ounce. Gold prices rose to a multi month high on Thursday, reaching a peak of $2724.61 per ounce during trading, not far from the over two month high of $2726.05 reached on December 12, closing at $2714.49 per ounce. This is the third consecutive trading day of gains, as the latest US economic data further lowers US bond yields and core inflation data is weak this week, increasing market bets on a more dovish Federal Reserve policy.

The US Department of Labor announced on Thursday that the number of initial jobless claims increased seasonally to 217000 in the week ending January 11th. A Reuters survey predicts that the number of first-time applicants for unemployment benefits will be 210000.

In addition, the US Bureau of Statistics reported that retail sales in December increased by 0.4% month on month, slightly lower than market forecasts, but the November growth rate was revised upwards to 0.8. Meanwhile, in December, US import prices only rose slightly, marking the third consecutive month of increase, indicating a mild inflation outlook.

Alex Ebkarian, chief operating officer of Allegiance Gold, said: "The number of initial claims for unemployment benefits exceeded expectations, so this indicates that the labor market has weakened. We also saw the yield of treasury bond bonds decline, so we saw the attractiveness of gold again."

After the release of retail sales, jobless claims and import price data, the 10-year treasury bond bond yield shrank and traded at a low for more than a week. Federal Reserve's Waller said that it may cut interest rates three to four times this year, which will also drag down the performance of US bond yields.

Previously, Federal Reserve Governor Waller stated that if US economic data further softens, it is still possible to cut interest rates three to four times this year.

According to data from the London Stock Exchange Group (LSEG), after Waller's speech, the expectation of a rate cut in the US interest rate futures market in 2025 increased from about 37 basis points late on Wednesday to about 43 basis points. The market also believes that the probability of the next interest rate cut occurring at the Federal Reserve's June meeting is 69%.

Before Waller's speech, traders expected the next rate cut to be in the second half of the year.

Inflation is approaching our 2% target, "Waller said on CNBC. He pointed out that the estimated data shows that the key indicator for measuring core inflation - the personal consumption expenditure price index excluding food and energy costs - has been close to the Federal Reserve's target in six out of the past eight months. (Full Story)

Thursday's report also hit the outlook for US economic growth, supporting the expectation that the Federal Reserve will cut interest rates at least once this year. Prior to the release of these data and Wednesday's softer core inflation data, some investors had already begun to anticipate that the Federal Reserve would remain inactive throughout the year, with a few investors already considering interest rate hikes.

John Luke Tyner, Head of Fixed Income and Portfolio Manager at Aptus Capital Advisors, said, "The data is trending softer, and comparing it to last year's very high data should steer the year-on-year data in the right direction. I believe that if we see a few more data like Wednesday (when core price increases in the United States slowed down) and Thursday, similar rate cut expectations will be digested by the market again, with at least two rate cuts consistent with the Federal Reserve's forecast

The only surprising thing is the Philadelphia Fed Manufacturing Index, which jumped to 44.3 in January and was predicted to be negative 5, which some analysts believe may be an abnormal reading. This is the largest increase since April 2021.

On Thursday, the yield of 10-year treasury bond fell 4.1 basis points to 4.654%, the lowest point in the session hit 4.587%, the lowest since January 6.

However, Robert Tip, Chief Investment Strategist and Global Head of Bonds at PGIM Fixed Income, said, "The Federal Reserve will want to cut interest rates to ensure that economic expansion continues. But even if it does... I don't think long bond yields will fall significantly because, as we have seen in recent months, the yield curve is trending towards normalcy

The US dollar index fell 0.15% on Thursday to 108.93. Amo Sahota, head of Klarity FX in San Francisco, said that Wednesday's weaker consumer price data continued to affect market sentiment, leading to market expectations that the Federal Reserve will still implement two interest rate cuts this year. Sahota said, "The market sentiment is generally slightly optimistic, but until next Monday, the market is still in a wait-and-see state

The market is preparing for Trump's inauguration ceremony next Monday (January 20), when he will return to the White House. Analysts predict that some of his policies will promote economic growth and increase price pressures.

Another focus of market attention on Thursday is the nomination hearing for Scott Bessent, Trump's candidate for Treasury Secretary.

It is expected that Benson will control the US deficit and use tariffs as a negotiating tool to alleviate the expected impact of the Trump administration's economic policies on inflation.

So far, his remarks have not deviated too much from our expectations, "Sahota said. This is a government that needs to address spending issues. Therefore, we expect government spending to decrease. They do want to reintroduce tax cuts, and we have seen this news

In addition, the achievement of the Middle East ceasefire agreement has slightly suppressed the safe haven buying demand for gold. Data shows that the world's largest gold ETF-SPDR holdings decreased by 3.74 tons to 868.78 tons.

US Secretary of State Antony Blinken said Thursday that although negotiators need to resolve "outstanding issues" at the last minute, the ceasefire in Gaza should start on Sunday as planned.

Due to long-standing and significant differences among ministers, Israel has postponed the cabinet meeting to approve the ceasefire agreement with Hamas. Media reports suggest that the vote may take place on Friday or even Saturday, but the agreement is expected to be approved.

Israeli warplanes launched the most fierce attack on Gaza in months, but Israel still accuses Hamas of delaying the ceasefire. The Palestinian Authority stated that at least 86 people have lost their lives within a day since the announcement of the ceasefire agreement.

Hamas senior official Izzat el Reshiq stated that Hamas remains committed to the ceasefire agreement, which is scheduled to take effect on Sunday to end the 15 month long bloody conflict.

"In such a challenging and tense negotiation process, it is not surprising that there may be problems to deal with," Antony Blinken said at a press conference in Washington, D.C. "At the moment of the conversation, we are cleaning up the situation."

An anonymous US official stated that both sides are making smooth progress in eliminating last-minute obstacles. He told Reuters, 'I think it will be okay.' The official had previously stated that the only remaining controversy was the identity of some of the prisoners Hamas wanted to release. The official said that the envoys of President Biden and President elect Trump are currently in Doha, working with mediators from Egypt and Qatar to resolve the issue.

Under the mediation of Qatar, Egypt, and the United States, a ceasefire agreement was reached on Wednesday. The agreement outlines the key points of a preliminary six week ceasefire, and the Israeli army will gradually withdraw. Dozens of hostages held hostage by Hamas will be released in exchange for hundreds of Palestinian prisoners held in Israel.

Peace can also bring broader benefits to the entire Middle East region, including the end of the Houthis movement in Yemen's interference with global trade, which has attacked Red Sea ships. Houthi leader Abdul Malik al Houthi said his organization will monitor the ceasefire situation and will continue to launch attacks if the ceasefire is disrupted.

Israel will not formally accept the agreement until it is approved by the security cabinet and government. The vote was originally scheduled for Thursday, but Prime Minister Netanyahu postponed the meeting, accusing Hamas of making a last-minute demand. Netanyahu's office stated, "The Israeli Cabinet will not hold a meeting until the mediator notifies Israel that Hamas has accepted all the contents of the agreement." Israeli media reports indicate that the Cabinet is expected to vote on Friday or Saturday, but the Prime Minister's office is unwilling to provide an opinion on the timetable

The hardliners in the Netanyahu government still hope to block the agreement, but it is expected that most ministers will support the agreement and ensure its approval. Hardline National Security Minister Itamar Ben Gavir stated on Thursday that he will resign from his government position if the Gaza agreement is approved by the government.

In terms of economic data, this trading day needs to pay attention to the annual total number of new housing starts in the United States in December (10000 households), the initial annual total number of construction permits in the United States in December (10000 households), the monthly rate of industrial output in the United States in December (%), and the performance of China's GDP data in the fourth quarter.