Gold climbs to 7-month high (Jan 08, 2023 08:02PM ET)

Gold prices rose to a seven-month high Monday on signs that labor market inflammation has eased and expectations for slowing inflation in the United States and a change in the Fed’s hawkish tone.

The yellow metal rose on Friday after Labor Department data showed that nonfarm payrolls in the U.S. rose slightly in December from a year earlier.

The release of the report eased concerns that an overly buoyant U.S. labor market would prevent inflation from falling further this year.

The dollar weakened further Monday after losing most of last week’s gains following the release of the worse-than-expected jobs data. Meanwhile, the yield on 10-year government bonds also fell.

Markets are currently focused on Thursday’s U.S. Consumer Price Index inflation data, which is expected CPI to hit a one-year low in December, suggesting that the Fed’s drastic rate hikes in 2022 have had their intended effect.

The Fed is now expected to slow the pace of rate hikes. Most traders expect a hike of only 25 basis points in February. However, the central bank has warned that it could keep rates higher for longer.