Gold prices (XAU/USD) gained momentum on Thursday, recovering from a brief dip to $2,655 and maintaining positive traction, although it remains slightly below a four-week high during the early part of the European trading session. Despite a robust US Dollar (USD), which is holding near a two-year peak, the precious metal’s outlook remains bullish, supported by a combination of factors that suggest an extension of its near three-week upward trend.
The US Dollar’s strength is largely driven by signals from the Federal Reserve (Fed) that it plans to slow the pace of rate cuts in 2025, which has capped gold’s potential. However, geopolitical risks and concerns over potential tariffs from US President-elect Donald Trump continue to create a cautious market environment, fueling demand for gold as a safe haven. These factors have contributed to a slight pullback in US Treasury bond yields, which could limit further gains for the USD and lend support to gold prices.
Traders are now turning their attention to speeches from key Federal Open Market Committee (FOMC) members for additional market insights ahead of the highly anticipated US Nonfarm Payrolls (NFP) report set for release on Friday.
US Economic Data Adds to Gold’s Appeal
Recent US economic data has contributed to the mixed sentiment surrounding the US Dollar and Gold. The Automatic Data Processing (ADP) report showed that private sector payrolls in the US rose by 122,000 in December, falling short of November’s gain of 146,000 and missing analysts’ expectations of 140,000. Meanwhile, Initial Jobless Claims for the week ending January 4 fell to 201,000, the lowest since February 2024, indicating a stable labor market.
Minutes from the December FOMC meeting revealed that policymakers were seeing signs of easing labor market conditions and favored a slower pace of rate cuts due to stalling disinflation. This stance has placed pressure on gold, as it signals the potential for a stronger dollar in the near term.
In the geopolitical sphere, tensions continue to rise. US President-elect Trump is reportedly considering declaring a national economic emergency to impose a series of universal tariffs on both allies and adversaries, a move that could further unsettle markets. On the battlefield, Ukrainian troops have suffered significant losses amid Russia’s ongoing offensive, while Israeli airstrikes on the West Bank have escalated following recent attacks.
Technical Outlook: Gold Bulls Remain in Control
From a technical perspective, the immediate resistance for gold is seen around the $2,670 level. If this barrier is broken, gold prices are likely to gain further momentum, potentially reaching the $2,681–2,683 range before targeting the key $2,700 level. Oscillators on the daily chart are currently in positive territory, reinforcing the case for further price appreciation.
On the downside, any corrective pullback is expected to find support near $2,645, followed by stronger levels around $2,635 and the $2,615-2,614 zone, which marked this week’s low. A break below $2,600, including the 100-day Exponential Moving Average (EMA) and an ascending trend line, could trigger bearish momentum, potentially driving prices down to test the $2,583 low from December. Further downside could see gold prices approach the $2,550 support level.
Outlook Ahead of US NFP Report
Looking ahead, investors are poised for further clarity from speeches by influential FOMC members later in the day, while all eyes will remain on the US Nonfarm Payrolls report due on Friday. The ongoing geopolitical risks and shifts in market sentiment suggest that gold could maintain its bullish trend in the short term, as investors continue to seek refuge in the yellow metal amidst global uncertainties.
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