Gold Price Forecast: XAU/USD falls below $5,050 as traders await US jobs data

• Gold price falls to around $5,035 in Tuesday’s early Asian session. 

• Risk-on sentiment weighs on the Gold price, but strong demand from major central banks might cap its downside. 

• The delayed US January employment report will be in the spotlight on Wednesday. 

Gold price (XAU/USD) attracts some sellers near $5,035 during the early Asian session on Tuesday. The precious metal edges lower amid improved risk sentiment and some profit-taking. Traders brace for key US economic data later this week, including delayed employment and inflation reports. 

The yellow metal retreats after rising over the previous two days, as traders returned to equities on improved risk sentiment. The S&P 500 extends the rally to near its all-time highs following a volatile week. Additionally, hopes for the United States (US)-Iran negotiations could undermine a traditional asset such as Gold. Iran’s President Masoud Pezeshkian described the Friday nuclear talks with the US as “a step forward,” even as he pushed back against any attempts at intimidation. 

The potential downside for gold might be limited due to signs of strong demand. Data over the weekend showed that the People's Bank of China (PBOC) extended its gold buying reserve for a 15th straight month in January. The Chinese central bank’s gold holdings climbed to 74.19 million fine troy ounces by the end of January, up from 74.15 million the previous month.  

All eyes will be on the US January jobs data on Wednesday, as it could offer more clarity on the US Federal Reserve’s (Fed) policy direction. The US economy is expected to see 70,000 jobs added in January, while the Unemployment Rate is estimated to hold at 4.4%. On Friday, the US Consumer Price Index (CPI) inflation data will be in the spotlight. Any signs of weakening in the US labor market or easing inflation could drag the US Dollar (USD) lower and support the USD-denominated commodity price in the near term.