Gold Price Forecast: XAU/USD remains moderately bid with $5,100 holding bulls
- Gold remains within the weekly range between $5,000 and $5,1000.
- The US Dollar found support following the strong US Nonfarm Payrolls data.
- XAU/USD´s bullish trend remains intact, although momentum has faded.
Gold (XAU/USD) is trading practically flat at the top of the weekly range on Thursday, with bulls capped right below February’s peak in the $5,100 area. Precious metals remain in a consolidating mood for the third consecutive day, as the strong US Nonfarm Payrolls report failed to provide a significant impulse to the USD.
Nonfarm payrolls data released on Wednesday showed 130K net jobs in January, almost twice the 70K market consensus, with the Unemployment Rate falling unexpectedly to 4.3% and wage inflation growing at a steady pace.
These figures have prompted investors to pare back bets of immediate rate cuts by the US Federal Reserve (Fed), although the impact on the US Dollar has been moderate. The strong concentration of January’s payrolls in the healthcare sector, and the sharp downward revision of last year’s employment growth has weighed on investors' optimism.
Technical Analysis
The 4-hour chart shows XAU/USD trading within a narrow range, with upside attempts capped below $5,100. Technical indicators are mixed. The Moving Average Convergence Divergence (MACD) histogram is showing a mild bearish pressure while the Relative Strength Index (RSI), at 55, highlights a neutral-to-positive tone.
Price action remains above the 100-period SMA, which supports the view that the pair is on a C-D leg of a Gartley pattern aiming for the 78.6% Fibonacci retracement level of the late January sell-off, at the $5,340 area.
On the downside, a bearish reversal between the mentioned 100-period SMA, now around the $5,000 level, and Tuesday's lows, in the area of $4,995, would increase pressure towards the February 6 low, at $4,655.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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