Gold weakens despite dovish Fed outlook
Gold (XAU/USD) saw a mild recovery during Thursday’s European session after touching a three‑day low, yet the metal remains on track for a second consecutive daily decline. Despite growing market expectations that the Federal Reserve will deliver two additional rate cuts this year, the US Dollar has been unable to capitalize on its two‑day rebound. Meanwhile, rising geopolitical risks and a slight deterioration in global risk sentiment continue to offer a layer of support for the precious metal.
Even so, gold buyers prefer to stay on the sidelines, awaiting clearer signals regarding the Federal Reserve’s policy path. As a result, market attention is firmly centered on Friday’s Nonfarm Payrolls (NFP) report, which could shape the short‑term direction of both the US Dollar and gold. Weekly Initial Jobless Claims may also trigger short‑lived volatility during the North American session.
The market’s initial reaction to the arrest of Venezuela’s president by United States forces over the weekend has now faded, contributing to a second day of selling pressure on gold. However, several factors are preventing sellers from taking aggressive positions:
Threats by the President of the United States regarding potential military action against Colombia and Mexico
Statements from the Secretary of State reaffirming Washington’s intention to maintain its strategic ambitions over Greenland
Lack of progress in Russia–Ukraine peace negotiations
Ongoing tensions in Iran and Gaza
These developments keep geopolitical risk elevated, which in turn supports gold as a safe‑haven asset. Additionally, expectations for a March rate cut—followed by another later in the year—are helping limit deeper downside moves.
The latest ISM report showed that the United States services sector unexpectedly strengthened in December, with the Services PMI rising from 52.6 to 54.4. However, this positive surprise was offset by two weaker labor‑market indicators:
ADP report: 41,000 jobs added, compared to a 29,000 decline previously
JOLTS report: job openings fell to 7.146 million
This mixed data set has encouraged traders to avoid heavy positioning ahead of Friday’s NFP release.
Traders recognize that the NFP report could:
Shift expectations for the Federal Reserve’s rate‑cut trajectory
Influence demand for the US Dollar
Ultimately determine gold’s short‑term direction
For now, the market remains in a state of caution and anticipation. Weekly jobless claims may spark brief volatility, but the broader trend hinges on NFP.
From a technical perspective, the $4,425 zone — which includes:
The 100‑hour Simple Moving Average (SMA100)
The 38.2% Fibonacci retracement
— serves as a key support area for gold. A decisive break below this level could trigger technical selling pressure, pushing the metal toward $4,400.
MACD remains below the signal line and below zero → bearish momentum strengthening
RSI near 40 and declining → limited upside potential
On the resistance side:
Initial resistance sits at the 23.6% Fibonacci near $4,450
A sustained move above the 38.2% level could stabilize the market tone
Failure to reclaim this zone would deepen the correction