09 Jan 2025

Gold prices have experienced an upward trend for the third consecutive day, bolstered by a variety of factors. Geopolitical uncertainties, concerns regarding trade conflicts, and declining US bond yields are contributing to the strength of the XAU/USD pair. Market participants are now anticipating remarks from Federal Reserve officials to provide further direction in advance of the US Non-Farm Payroll report scheduled for Friday.

Gold prices (XAU/USD) are drawing interest from dip-buyers around the $2,655 mark on Thursday, as they approach a four-week high reached the previous day. The prevailing cautious sentiment in the market, coupled with geopolitical uncertainties and apprehensions regarding US President-elect Donald Trump's tariff strategies, are significant factors supporting this safe-haven asset. Additionally, the movement towards safety has resulted in a slight decline in US Treasury bond yields, contributing to the inflow into the precious metal for the third consecutive day.

On the other hand, the Federal Reserve's (Fed) indications of a more measured approach to rate cuts in 2025 are helping the US Dollar (USD) maintain its strength near a two-year peak achieved last week. This situation may deter traders from making aggressive bullish investments in the non-yielding Gold. Furthermore, investors are likely to adopt a wait-and-see approach ahead of the US Nonfarm Payrolls (NFP) report scheduled for release on Friday. The mixed economic indicators also suggest a degree of caution before making any further investment decisions.

Gold price attracts some haven flows and also draws support from sliding US bond yields

Automatic Data Processing (ADP) announced that private sector payrolls in the United States increased by 122,000 in December, a figure that falls short of November's rise of 146,000 and below the anticipated 140,000. Additionally, a report from the Labor Department indicated that Initial Jobless Claims reached 201,000 for the week ending January 4, representing the lowest level since February 2024 and suggesting a stable labor market.

Minutes from the December Federal Open Market Committee (FOMC) meeting revealed that policymakers perceived labor market conditions as gradually improving and supported a reduction in the pace of interest rate cuts due to a slowdown in disinflation.

On Wednesday, the yield on the benchmark 10-year US government bond surged to its highest point since April 25, contributing to the US Dollar maintaining its strength near a two-year high, while simultaneously exerting downward pressure on Gold prices.

CNN reported that President-elect Donald Trump is contemplating the declaration of a national economic emergency to legally justify implementing universal tariffs on both allies and adversaries.

Ukrainian forces faced considerable manpower losses amid Russia's ongoing offensive, with Russia's Defence Ministry claiming victories over Ukrainian brigades in Seversk and Chasov Yar.

Israeli airstrikes persisted across the West Bank on Wednesday following an attack that resulted in the deaths of three Israelis on Monday, with the Israeli military recovering the body of a hostage from southern Gaza.

Investors are now anticipating speeches from several key FOMC members for short-term market direction later in the US session, while maintaining a keen focus on the upcoming US Nonfarm Payrolls report scheduled for Friday.

Gold price technical setup favors bulls and a move towards reclaiming the $2,700 mark

From a technical standpoint, the overnight swing high, situated around the $2,670 level, now appears to serve as an immediate obstacle. Should this level be surpassed, it would likely be interpreted as a new signal for bullish traders. With oscillators on the daily chart beginning to trend positively, the price of Gold may subsequently rise towards an intermediate resistance in the vicinity of the $2,681-2,683 range, on the way to the $2,700 threshold.

Conversely, any additional decline is expected to encounter support near the $2,645 level, followed by the $2,635 area and the weekly low, approximately around the $2,615-2,614 range reached on Monday. A continuation of selling pressure below the $2,600 confluence, which includes the 100-day Exponential Moving Average (EMA) and a short-term ascending trend line originating from the November monthly low, would be regarded as a new signal for bearish traders. In such a scenario, the Gold price could become susceptible to further declines beneath the December swing low, around the $2,583 level, and approach the next significant support near the $2,550 area.