gold prices are holding steady just below the one-month peak of $2,678 reached recently, as traders await the release of the US Nonfarm Payrolls (NFP) data. This report is highly anticipated and could influence future trading strategies in the gold market.
The ongoing demand for gold as a safe-haven investment continues to support its price, countering the strength of the US dollar and rising yields in the Treasury bond market. Heightened inflation concerns, linked to potential immigration and trade policies from the incoming administration, are also contributing to gold ’s attractiveness as a hedge against rising prices.
As the dollar remains relatively strong — buoyed by expectations that the Federal Reserve will reduce interest rate cuts less aggressively this year — gold ’s price may be limited. Treasury yields for benchmark 10-year bonds have risen to an eight-month high above 4.68%, further complicating the prospects for non-yielding gold .
Market participants are generally cautious, avoiding significant moves before the NFP release. Analysts project that the US economy will add approximately 160,000 jobs in December, a decline from November’s 227,000. The unemployment rate is expected to remain stable at 4.2%, with average hourly earnings forecasted to hold steady at a 4% increase.
Should the NFP data disappoint, speculation around more aggressive rate cuts by the Federal Reserve could lead to a correction in the dollar, potentially fueling a further rise in gold prices. Conversely, if the employment figures exceed expectations, it might reinforce hawkish sentiments towards monetary policy, negatively impacting gold ’s trajectory.
Additionally, traders might consider booking profits on existing gold positions before the upcoming Consumer Price Index (CPI) data release. Nonetheless, uncertainties surrounding new policies may continue to provide support for gold prices in the near term.
In terms of technical analysis, the daily chart indicates that the Relative Strength Index (RSI) remains above the midpoint, suggesting ongoing bullish momentum for gold . However, there are signs of caution as a recent Bear Cross has emerged, signaling that future price movements may hinge significantly on the upcoming NFP data. If gold can surpass recent highs, it may target the $2,700 round level, while a stronger NFP report could push prices down toward significant support levels around $2,633 and $2,615.
