Gold prices (XAU/USD) remain under selling pressure for a second consecutive session, drifting back toward the previous day’s low during Thursday’s Asian trading hours. The pullback appears to be driven largely by profit-taking rather than a clear fundamental trigger, with downside moves so far proving contained amid a broadly supportive macro backdrop.
Lingering geopolitical risks and persistent expectations of US monetary easing continue to underpin demand for the safe-haven metal. At the same time, the US Dollar has struggled to extend its recent rebound, which has helped prevent deeper losses in Gold despite the near-term corrective tone.
Markets cautious ahead of US nonfarm payrolls
Wednesday’s mixed batch of US macroeconomic data did little to dislodge market expectations for two interest rate cuts by the Federal Reserve later this year. As a result, the US Dollar failed to build on gains recorded earlier in the week, offering indirect support to the non-yielding yellow metal.
Traders remain reluctant to place aggressive directional bets ahead of Friday’s highly anticipated US Nonfarm Payrolls report. The employment data is expected to provide clearer guidance on the Fed’s rate-cut trajectory and could act as the next major catalyst for Gold price action. Until then, caution prevails, limiting follow-through selling in XAU/USD.
Geopolitical tensions keep safe-haven demand alive
Recent profit-taking in Gold follows a fading initial market reaction to reports of the US capture of Venezuelan President Nicolas Maduro over the weekend. However, broader geopolitical uncertainty remains elevated and continues to act as a stabilizing force for bullion.
US President Donald Trump has warned that Colombia and Mexico could face potential US military action as part of an expanded campaign against criminal networks and regional instability. In addition, US Secretary of State Marco Rubio reiterated the administration’s stance on Greenland, keeping the option of military measures on the table. Ongoing tensions linked to the Russia-Ukraine conflict, unrest in Iran, and the situation in Gaza further reinforce underlying safe-haven demand.
These geopolitical concerns, combined with expectations that the Federal Reserve could cut rates as early as March and potentially again later in the year, are likely to limit the downside for Gold in the near term.
Mixed US data fails to shift Fed expectations
On the data front, the Institute for Supply Management reported a stronger-than-expected increase in US services sector activity in December, with the Non-Manufacturing PMI rising to 54.4 from 52.6 previously. However, the positive surprise was largely offset by weaker labor market indicators.
According to ADP, US private-sector employment increased by 41,000 in December, following a revised decline of 29,000 in November and falling short of market expectations. Separately, the JOLTS report showed job openings declining to 7.146 million in November, reinforcing signs of gradual cooling in the labor market.
With attention firmly fixed on Friday’s NFP release, Thursday’s Weekly Initial Jobless Claims data may generate short-term volatility but is unlikely to alter the broader market narrative.
Technical outlook: key support in focus for XAU/USD
From a technical standpoint, Gold is approaching a critical confluence support near $4,425, where the 100-hour Simple Moving Average aligns with the 38.2% Fibonacci retracement of the recent upward move. A decisive break below this area could trigger additional technical selling, exposing the $4,400 level.
Momentum indicators lean bearish, with the MACD line positioned below the signal line and below zero, while the histogram continues to expand negatively. The Relative Strength Index is hovering near 40 and trending lower, suggesting limited upside potential. Any recovery attempts are likely to encounter resistance around the $4,450 region, near the 23.6% Fibonacci retracement, with failure to reclaim that level keeping the corrective bias intact.
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