Gold Stays Elevated As Dollar Stumbles on Risk Appetite Shift

rugpull_ptsd · 2026-01-12T18:45:32+00:00

Spot gold prices are near recent highs due to a weakening U.S. dollar and easing geopolitical tensions. However, poor manufacturing data raises concerns over economic growth, influencing expectations of potential Federal Reserve rate cuts, while investors navigate market uncertainties.

rugpull_ptsd

2026-01-12 18:45:32

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Spot gold is hoovering near recent highs, climbing to $4,455.92 per ounce on Tuesday—a testament to the metal’s resilience amid shifting market dynamics. U.S. gold futures climbed to $4,466, mirroring the strength in the physical market.

The driver? A weakening U.S. dollar for the second consecutive day. President Trump’s dovish comments regarding Venezuela in an NBC News interview eased geopolitical risk premiums, sparking a modest recovery in investor risk appetite. His remarks that “we’re not at war” and his projection of a gradual engagement—no elections for the next 30 days—mollified markets that had priced in escalation scenarios.

But there’s more to the story. December manufacturing data dealt a blow to economic optimism, shrinking at its fastest pace in recent months. This contraction is reigniting expectations among traders that the Federal Reserve may resume its easing cycle.

The policy picture remains nuanced. Philadelphia Fed President Anna Paulson struck a cautious note on 2026 growth prospects while suggesting rate cuts remain possible but data-dependent. Conversely, Minneapolis Fed President Neel Kashkari hammered home a more hawkish tone on CNBC Monday, emphasizing that inflation hasn’t fully retreated and the central bank is nearing its cutting endpoint.

This week’s critical releases—the December employment report, New York Fed’s inflation survey, and November JOLTS data—will prove decisive. Investors are essentially gaming Fed policy through the metals market, with gold serving as the ultimate risk hedge in an uncertain macro environment. The metal’s current positioning reflects this tug-of-war between stagflation concerns and policy pivots.

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