Gold price (XAU/USD) maintains its modest intraday gains during the European session on Friday. The price remains close to the record high reached earlier this week. Rising tensions between the US and China and concerns over economic repercussions from US trade policies continue to support the demand for gold.
Meanwhile, the US Dollar (USD) struggles to gain momentum. Expectations that the Federal Reserve (Fed) might lower interest rates twice this year have contributed to a sharp decline in US Treasury bond yields. This development further boosts the appeal of non-yielding gold ahead of the crucial US Nonfarm Payrolls (NFP) report.
Gold Price Strengthened by Multiple Factors
China has announced new tariffs on select US goods in response to US President Donald Trump’s 10% levy on Chinese imports. This move intensifies the trade war between the world’s two largest economies, increasing demand for gold as a safe-haven asset.
On the economic front, data from the US Department of Labor (DoL) showed an increase in new unemployment insurance claims. The number of applicants rose to 219K for the week ending February 1, compared to the previous week’s 208K.
US Treasury Secretary Scott Bessent stated on Thursday that the administration is not overly concerned about the Federal Reserve’s interest rate decisions. The primary focus remains on reducing the 10-year Treasury yields.
The benchmark 10-year US Treasury bond yield recently dropped to its lowest level since December 12. Market speculation suggests the Federal Reserve may implement two rate cuts by the end of 2025, further enhancing gold’s appeal.
Chicago Fed President Austan Goolsbee highlighted that inflation stagnation is primarily due to base effects. The Federal Reserve remains cautious about economic overheating but believes the current situation is manageable.
Dallas Fed President Lorie Logan acknowledged notable progress in inflation control. However, she emphasized that the US labor market remains strong, delaying potential interest rate cuts. This factor fails to provide significant support for the US Dollar.
Key Market Events Impacting Gold Price
Investors are closely watching the upcoming US Nonfarm Payrolls report. Forecasts indicate the economy added 170K jobs in January, a decline from 256K in the previous month. The unemployment rate is expected to remain steady at 4.1%.
This employment data will influence market sentiment regarding the Federal Reserve’s monetary policy outlook. Any surprises in job figures could drive fluctuations in the USD, directly affecting gold price movements.
Gold Price Faces Resistance Amid Overbought Signals
From a technical standpoint, the recent gold price increase validates a near-term bullish outlook. However, the Relative Strength Index (RSI) signals slightly overbought conditions, urging traders to proceed with caution.
A short-term consolidation may occur before further price movements. Key support is found at the $2,855 level, followed by the overnight low near $2,834. Below this, support extends to the $2,815-$2,714 range.
If gold price decisively breaks below $2,800, increased selling pressure could push XAU/USD towards the $2,773-$2,772 resistance zone. A sustained drop beneath this level might trigger a deeper correction in the market.
Conclusion
Gold price remains strong due to ongoing trade tensions and economic uncertainty. The upcoming US NFP report will be a crucial factor in determining gold’s next move. For more updates on gold price movements, visit Daily Gold Signal. You can also explore the latest insights on gold trends by checking out the Daily Gold Update.
