Gold is trying to build on its recent gains… and headwinds may threaten its rise
Gold, dollars and interest
Prospects of slower interest rate cuts by the Federal Reserve are helping the US dollar hold near a two-year high that it touched last week and turned out to be a major factor weighing on the non-yielding yellow metal.
However, the cautious market mood, geopolitical risks and trade war fears continue to support the safe-haven commodity.
Gold investors await jobs data
As analysts say, the flight to safety leads to a modest decline in US Treasury bond yields, which in turn prevents the dollar from placing new bets and contributes to limiting the downside of the gold price and its decline.
Read also: Gold prices achieve a new jump with anticipation of US inflation data
Investors may also choose to wait on the sidelines ahead of the US Nonfarm Payrolls report due on Friday.
Meanwhile, speeches from a number of influential FOMC members will be considered for short-term trading opportunities later in the US session on Thursday.
The labor market and US interest expectations
Data processing company ADP reported that the number of private sector workers in the United States rose by 122,000 jobs in December, which is far less than the increase of 146,000 jobs in November and below expectations of 140,000 jobs.
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A separate US Department of Labor report showed that initial unemployment claims reached 201,000 in the week ending January 4, which is the lowest level since February 2024 and indicates labor market stability.
The minutes of the Federal Committee meeting showed that policymakers considered that labor market conditions were gradually improving, thus supporting slowing the pace of interest rate cuts amid the easing of deflation.
Dollar strength limits gold’s rise
The yield on the benchmark 10-year US government bond also rose to its highest level since April 25 on Wednesday, helping the US dollar hold near a two-year high and undermining the price of gold.
CNN reported that US President-elect Donald Trump is considering declaring a national economic emergency to provide a legal justification for imposing a series of comprehensive tariffs on allies and adversaries.
Gold and geopolitical tensions
Analysts say that the Ukrainian forces have suffered heavy human losses in the face of the ongoing Russian attack, with the Russian Ministry of Defense saying that its forces defeated the Ukrainian brigades in Seversk and Chasov Yar, in addition to the continued air strikes by the Israeli occupation throughout the West Bank on Wednesday following an attack that resulted in the deaths of three Israelis. On Monday, things are influential in pushing gold.
Gold in spot transactions fell 0.1% to $2,660.36 per ounce, while gold futures contracts expiring in February rose 0.2% to $2,678.60 per ounce.
Gold is ready to rise again
Analysts say that it appears that the price of gold is ready to rise further, as the horizontal support level of $2,635 represents a key to the rise. From a technical perspective, it appears that the rise recorded by gold at the level of $2,670 per ounce constitutes an immediate obstacle, and if it is crossed, it will be seen as a new incentive for traders to rise. .
Since these fluctuations have begun to move in a positive zone, the price of gold may then rise to a moderate resistance level near the $2,681-2,683 per ounce area on its way to the $2,700 level.
Potential pressure on gold
On the other hand, any further decline in gold is likely to find a bearish position near the $2,645 area before the $2,635 area and weekly lows around the $2,615-2,614 area were touched on Monday.
The possibility of gold then slipping below the December low around $2,583 and testing the next related support near $2,550 cannot be ruled out.
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