Gold Gains 0.5% Amid Softer Dollar, Eyes U.S. Jobs Data for Next Move

Gold prices edged up on Monday, supported by a slight decline in the U.S. dollar as investors awaited critical economic data, including December’s nonfarm payrolls report, for insights into the Federal Reserve’s interest rate strategy. Spot gold rose 0.5% to $2,641, hovering near key support levels as the market remains cautious about upcoming economic events.

Gold Price Chart

U.S. Jobs Data Could Shape Gold’s Trajectory

According to Tim Waterer, Chief Market Analyst at KCM Trade, gold prices are benefiting from a weaker dollar, though their next significant move hinges on U.S. jobs data due this week. “A softer dollar has lent gold modest gains, but the real test will come from nonfarm payrolls and ISM Services PMI data. Any downside surprises could pressure the dollar and push gold higher,” Waterer noted.

The labor market reports, including the ADP employment data and job openings, alongside minutes from the Fed’s latest meeting, are expected to provide further clarity on the central bank’s stance. Persistent inflation and signs of labor market cooling could influence the Fed to maintain a cautious pace of rate reductions, limiting gold’s downside while keeping its upside potential intact.

The Fed’s Rate Path and Geopolitical Impacts

The Federal Reserve’s projected two rate cuts in 2025—down from three in 2024—indicate a focus on taming inflation, which remains stubbornly above its 2% target. Richmond Federal Reserve President Thomas Barkin emphasized that restrictive monetary policy would remain until clearer signs of inflation control emerge.

Simultaneously, U.S. President-elect Donald Trump’s impending return to office on January 20, 2025, is expected to drive inflation through proposed tariffs and protectionist policies. This scenario could bolster gold’s appeal as a hedge against economic uncertainty and inflation while tempering the Fed’s rate-cutting ambitions.

Daily Technical Outlook: Gold Spot (XAU/USD) – January 6, 2025

Gold prices are trading at $2,641, reflecting a slight daily decline of 0.01% amid steady positioning above critical supports. Immediate support lies at $2,636, closely aligned with the 50-day EMA. A sustained break below this level could push prices toward $2,633 and $2,618.

Conversely, resistance is positioned at $2,665, followed by $2,680 and $2,700. The Relative Strength Index (RSI) near 50 suggests neutral momentum. A breakout above $2,665 could validate bullish momentum, while the persistent downward trendline continues to cap price gains, leaving the market in consolidation mode for now.

Key Insights:

  • Resistance Levels: Immediate resistance at $2,665; further targets at $2,680 and $2,700.
  • Support Levels: Key supports at $2,636, $2,633, and $2,618.
  • Market Sentiment: Neutral RSI suggests balanced momentum; Fed’s inflation focus and Trump’s economic policies remain pivotal for gold’s direction.
Check out our free forex signals
Follow the top economic events on FX Leaders economic calendar
Trade better, discover more Forex Trading Strategies
ABOUT THE AUTHOR See More
Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
Related Articles
Comments
0 0 votes
Article Rating
Subscribe
Notify of
0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments