Gold Price Forecast: XAU/USD picks up within range aiming for $4,500
- Gold rallies to $4,470 after bouncing from $4,407 lows on Thursday.
- Precious metals rally on Friday with all eyes on US employment, tariffs ruling.
- The pair remains trapped within the weekly channel with $4,500 resistance capping bulls.
Gold (XAU/USD) sellers were halted at the $4,400 support area on Thursday, and bounced up to the highest range of the $4,400s, aiming for the $4,500 area with precious metals buoyed amid a moderate risk aversion on Friday.
Investors trade with caution, awaiting the US Supreme Court’s decision on Trump’s trade tariffs, which might lead to reimbursement claims of about $150 billion on levies already paid by US companies.
Apart from that, the market awaits the release of December’s US Nonfarm Payrolls report. Employment creation is expected to have remained at moderate levels, with the jobless rate ticking down. The final figures, however, are unlikely to ease the wide divergence among Fed policymakers regarding the next steps ahead.
Technical analysis: Rangebound trading below $4,500
XAU/USD trades at $4,473 after bouncing from the 100-period Simple Moving Average (SMA) in the 4-hour chart, at the $4,400 area. Technical indicators show an improved momentum, but price action remains trapped within the weekly channel. The Moving Average Convergence Divergence (MACD) and its Signal line converge around the zero line, with the histogram contracting on the negative side, which suggests a fading bearish pressure. The Relative Strength Index (RSI) prints 58, a positive tone without overbought risk.
Immediate resistance aligns with the January 7 high, in the $4,500 area, ahead of the all-time high, near $4,500. A bearish reversal, on the contrary, is likely to find support at the $4,400 area, where the mentioned 100 SMA meets Thursday's low. Further down, the next target is the January 2 low, near $4,310.
(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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