Market update: gold price forecast - US jobs data to shape near-term trend, setup on XAU/USD

The Federal Reserve concluded earlier this week its first meeting of 2024, voting to maintain its policy settings unchanged. The FOMC also abandoned its tightening bias, but indicated it will not rush to cut borrowing costs. Chairman Powell went a step further by acknowledging that officials may not yet be confident enough to remove restriction at their next gathering.

Although the possibility of a rate cut in March has diminished, the situation could change again if incoming information shows that activity is starting to roll over. In the grand scheme of things, a weaker economy could prompt policymakers to reconsider their stance; after all, data dependency has been the guiding principle for the central bank recently.

Given the present state of events, the January US employment report will assume greater importance and carry added weight. That said, Wall Street projections suggest US employers added 180,000 workers last month, though a softer outcome should come as no surprise following a subdued ADP reading and rising jobless claims for the period in question.

Upcoming us jobs report

If nonfarm payrolls figures prove lackluster and fall well short of expectations, a March rate cut might be back on the table. Under these circumstances, we could observe a sharp retracement in US treasury yields and the US dollar. This scenario is likely to foster a constructive environment for gold in the near term.

On the other hand, if NFP numbers beat consensus estimates by a wide margin, there’s potential for further reduction of dovish wagers on the Federal Reserve’s monetary policy outlook. In this scenario, bond yields and the greenback could accelerate to the upside, weighing on the precious metals complex. In this context, bullion could find itself in a precarious position in February.

Gold price technical analysis

Gold climbed on Thursday, pushing past the $2,050 barrier and coming within a hair's breadth of breaking $2,065, a key ceiling. With the bulls reasserting control, this resistance could soon be overcome. If that scenario plays out, a rally toward $2,085 is possible. On further strength, the focus will turn to $2,150.

Conversely, if buying interest fades and XAU/USD pivots lower, it's vital for traders to watch the $2,050 level for bearish activity. If this area fails to offer support, a drop toward the 50-day simple moving average may unfold, followed by a possible retest of $2,005. Below this floor, all eyes will be on $1,990.

Gold price daily chart

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