Gold Rebounds Toward $4,880 as US Labor Market Cools and Rate Cut Bets Surge
This week, gold (XAU/USD) stopped its recent decline and found support near $4,840. As the US economic outlook worsened...
Quick overview
- Gold (XAU/USD) found support near $4,840 as investors turned to it amid a weakening US economic outlook.
- Weak US job data has increased expectations for interest rate cuts in 2026, making gold more attractive as a non-yielding asset.
- Technically, gold is consolidating within a descending channel, with key support at $4,865 and resistance near $4,940.
- A bullish trade strategy suggests buying if gold breaks above $4,950, targeting $5,150, with a stop-loss below $4,720.
This week, gold (XAU/USD) stopped its recent decline and found support near $4,840. As the US economic outlook worsened, investors returned to gold as a safe-haven asset.
This rebound comes at an important time for the Federal Reserve. As the US job market weakens, traders expect several interest rate cuts in 2026, making non-yielding assets like gold more attractive.
Weak US Jobs Data Fuel Hopes for Aggressive Rate Cuts
The main reason for the recent rise in metals is the slowing US economy. New data shows the job market is weaker than expected, which could give the Federal Reserve a reason to lower interest rates.
The CME Group’s FedWatch Tool shows that traders now expect at least two 25-basis-point rate cuts in 2026. This view has grown stronger after several weak employment reports.
| Economic Indicator | Actual Result (Jan 2026) | Previous / Forecast |
| ADP Private Jobs | 22K | 37K (Revised) / 48K Exp. |
| JOLTS Job Openings | 6.542M | 6.928M |
| Weekly Jobless Claims | 231K | 225K (Prior) / 228K Exp. |
The ADP report showed slow hiring, especially in manufacturing and professional services. This has hurt the US Dollar Index (DXY) and helped boost gold prices.
Technical Outlook: Gold Consolidates Inside Descending Channel
From a technical perspective, gold is in a recovery phase. On the 4-hour chart, XAU/USD is near $4,880 and trying to stabilize after falling from its $5,600 peak.
Key Technical Levels to Watch:
- Immediate Support: The 38.2% Fibonacci retracement at $4,865 remains the first line of defense.
- Critical Demand Zone: A major support belt exists between $4,720 and $4,750, where the 200-EMA aligns with a long-term rising trendline.
- Resistance Ceiling: The 50-EMA near $4,940 continues to cap upside attempts, forming the upper boundary of a descending channel.
The Relative Strength Index (RSI) is currently hovering near 47, indicating a neutral momentum. However, the presence of smaller candle bodies and longer lower wicks suggests that selling pressure is exhausting, and a breakout could be imminent.
XAU/USD Trade Strategy
Right now, it may be best to wait for a clear breakout before making any moves.
- Bullish Scenario: A confirmed daily close above $4,950 would signal a breakout from the descending channel, potentially reopening the path toward $5,150.
- Bearish Scenario: A failure to hold the $4,720 support level could trigger a deeper correction toward the $4,550 mark.
A possible trade is to buy if gold breaks above $4,950, aim for $5,150, and set a stop-loss below $4,720.
- Check out our free forex signals
- Follow the top economic events on FX Leaders economic calendar
- Trade better, discover more Forex Trading Strategies
- Open a FREE Trading Account
- Read our latest reviews on: Avatrade, Exness, HFM and XM
Save