Gold moved back above US$5,100 early Friday, recovering after briefly testing the US$5,050 area during the broader global market sell-off.
For now, the metal appears to be in a holding pattern, with investors looking to the latest US Nonfarm Payrolls (NFP) report for the next meaningful catalyst.
A modest pullback in the US dollar has helped gold regain some ground heading into the US labour market release, with traders taking profits after the greenback’s recent strength. The softer dollar tone has given the precious metal some breathing room following a volatile stretch.
Gold has also found some support from a slight easing in oil prices after the Trump administration indicated it was considering options to address the recent spike in oil and gasoline prices following the escalation in Iran. Lower oil prices can help temper inflation concerns at the margin, which in turn can reduce short-term pressure on gold.
That said, the broader backdrop remains uneasy. Oil surged again on Thursday, fuelling a wider “sell everything” move across markets as investors weighed the risk of renewed inflation and the potential hit to global growth. In that environment, the US dollar attracted safe-haven demand, limiting gold’s upside despite ongoing geopolitical tension.
The next major test for gold is the February US jobs report. Markets are expecting payroll growth of around 60,000, down from 130,000 in January, while the unemployment rate is forecast to hold steady at 4.3%.
The result could have an immediate impact on expectations for US interest rates.
A weaker-than-expected payrolls number, particularly a print below 50,000, would likely revive expectations for a more dovish Federal Reserve and strengthen the case for interest rate cuts later this year. That would generally support gold, which tends to perform better in a lower-rate environment.
Conversely, a stronger jobs result could reinforce the view that the Fed will keep policy tighter for longer. If markets begin scaling back expectations for rate cuts, that could weigh on gold by lifting bond yields and supporting the US dollar.
In other words, gold is approaching a key fork in the road, and the NFP release may provide the next clear directional move.
While economic data is front of mind, geopolitical risk remains an important part of the picture. Despite ongoing conflict in the Middle East, gold has not yet fully capitalised on safe-haven demand.
That reflects the market’s current balancing act. On one side, geopolitical tension would normally support bullion. On the other, higher oil prices and inflation concerns are strengthening the US dollar and bond yields, which can work against gold.
For now, that tug-of-war is keeping the metal rangebound.
From a technical standpoint, gold’s near-term outlook still leans constructive.
The metal continues to hold above its 21-day simple moving average near US$5,087, while remaining comfortably above the 50-, 100- and 200-day averages. That suggests the broader uptrend remains intact, even after the recent pullback from record highs.
Momentum indicators are also relatively healthy. The RSI is sitting around 54, pointing to steady upside momentum without suggesting the market is overbought.
A key level to watch is the 61.8% Fibonacci retracement near US$5,141. This area is acting as an important line in the sand for buyers.
On the downside, initial support sits around the 21-day moving average, followed by the US$5,000 level. A break below that would shift focus toward US$4,859.
On the upside, resistance is seen near US$5,235, with the next hurdle around US$5,342. If gold can break above there, the market could start looking back towards the US$5,598 record high.
Gold has stabilised after a sharp bout of volatility, but conviction remains limited ahead of Friday’s US jobs data.
The broader picture still favours bullion, with the underlying trend intact and geopolitical risks lingering in the background. However, near-term direction will likely hinge on whether the labour market shows signs of cooling enough to strengthen the case for Fed rate cuts.
Until then, gold looks set to remain sensitive to both macro data and any fresh headlines out of the Middle East.
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