- The gold forecast remains slightly directionless as a stronger dollar balances the gold’s strong uptrend.
- Geopolitics, combined with an easing Fed, could keep gold prices supported in the medium term.
- Upbeat US NFP data could dampen gold’s hotter outlook.
As we head into Friday’s European session, gold prices are holding steady but cautious. XAU/USD has recovered from an early drop, trading near the $4,450–$4,470 range. The metal is still trading close to the top of its daily range.
However, upside momentum seems to be slowing down as traders prepare for the highly anticipated US Nonfarm Payrolls report. The labor data is likely to have a significant impact on how people perceive the Fed’s rate cut path, a key factor for the US dollar and non-yielding assets like gold.
Markets continue to indicate that people are becoming increasingly confident that the Fed will cut interest rates twice this year, likely as soon as March. This outlook, along with ongoing geopolitical uncertainty, continues to support the gold market. However, the US dollar has defied dovish expectations, continuing a two-week rally that has pushed it to a month-high. The stronger dollar, backed by strong US data and cautious positioning before the NFP, has capped aggressive bullish bets in gold for now.
Recent US labor indicators haven’t done much to hurt the dollar. Initial jobless claims rose slightly to 208,000 but remained largely unchanged, indicating stability. This limited the demand for safe-haven metals in the short term. As a result, gold’s recent decline appears more like a correction than a shift in trend, particularly given its strong rally over the past few months.
Geopolitics still provides us with a solid foundation. Gold has become an even more effective way to protect against global instability due to the US’s involvement in Venezuela, the growing trade tensions between China and Japan, and the ongoing conflict between Russia and Ukraine. Central bank demand adds another layer of support to the structure. For example, the Swiss National Bank’s gold holdings increased significantly in value after last year’s sharp price rise.
The NFP report is the point of attention in today’s session. If the print is softer, it could revive hopes for a rate cut, weaken the dollar, and give gold a chance to test record highs again. On the other hand, stronger-than-expected job numbers could keep the dollar strong and gold in a holding pattern for a while.
Gold Technical Forecast: Eyeing $4,500
Gold prices managed to move above the 20-period MA at $4,460 with odds to test the key resistance at $4,500. Meanwhile, the 200-period MA is pointing north along with 50- and 100-period MAs forming a bullish crossover, revealing a strong bullish bias.
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However, the RSI remains flat near 60.0, suggesting a potential consolidation before further upside. On breaking below the $4,460 level, the precious metal could find more sellers on the way to retreat towards Thursday’s lows around $4,407.
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