Gold Price Forecast: XAU/USD down but not out as key US data releases loom
- Gold faces rejection at $4,500, but bullish bias remains intact on geopolitics, Fed rate cut bets.
- US Dollar struggles with its recovery mode ahead of key top-tier US macro data.
- Gold eyes a daily close above $4,500 to revive the record rally amid bullish daily RSI.
Gold is correcting from weekly highs of $4,500 early Wednesday as buyers take a breather after the recent relentless upsurge, backed by geopolitical flare-ups globally and increased US Federal Reserve (Fed) interest rate cut bets for 2026.
Gold sees profit-taking ahead of key US jobs data
Having climbed nearly 4% so far this week, traders resort to profit-taking on their Gold long positions in a readjustment move after the bright metal ran into the $4,500 barrier.
Traders also gear up for a bunch of high-impact US economic data releases due later on Wednesday, including the ADP monthly Employment Change, JOLTS Job Openings and ISM Services PMI data.
These data will be closely scrutinized to gauge the timing of the next Fed rate cut as markets continue pricing in two rate reductions for this year. Weaker-than-expected jobs and private services sector data could reaffirm bets for two cuts in the coming months, boding well for non-yielding assets like Gold at the expense of the US Dollar (USD).
On Monday, the US ISM Manufacturing PMI declined to 47.9 in December, against the forecast of 48.3, reinforcing dovish Fed expectations and keeping the recovery attempts in the USD short-lived.
The ongoing bearish undertone around the USD, combined with the escalating geopolitical tensions globally, continues to keep the positive momentum intact in Gold, despite the latest retracement.
On the latest geopolitical developments, Russia deployed submarine and other naval vessels to escort an aging oil tanker off the coast of Venezuela, according to the Wall Street Journal (WSJ).
Meanwhile, China ramped up tensions with Japan by banning exports of goods with potential military uses, following Taiwan-related remarks by Japan’s Prime Minister Sanae Takaichi.
Gold price technical analysis: Daily chart
In the daily chart, the 21-day Simple Moving Average (SMA) advances above the 50-day, with price holding over both, signaling firm bullish momentum. The 21-day SMA at $4,363.88 acts as nearby dynamic support. The Relative Strength Index (RSI) at 63.41 remains in bullish territory without overbought readings, keeping the bias tilted to the upside.
Broader trend metrics stay supportive as the 100- and 200-day SMAs continue to climb and the market trades above them. The moving average stack shows buyers in control, with secondary support at the 50-day SMA around $4,212.04 and deeper layers near the 100-day at $3,997.46 and the 200-day at $3,653.43. As long as price holds above the 21-day SMA, the uptrend would extend, while pullbacks could be absorbed into the rising averages.
(The technical analysis of this story was written with the help of an AI tool)
Economic Indicator
ADP Employment Change
The ADP Employment Change is a gauge of employment in the private sector released by the largest payroll processor in the US, Automatic Data Processing Inc. It measures the change in the number of people privately employed in the US. Generally speaking, a rise in the indicator has positive implications for consumer spending and is stimulative of economic growth. So a high reading is traditionally seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Wed Jan 07, 2026 13:15
Frequency: Monthly
Consensus: 45K
Previous: -32K
Source: ADP Research Institute
Traders often consider employment figures from ADP, America’s largest payrolls provider, report as the harbinger of the Bureau of Labor Statistics release on Nonfarm Payrolls (usually published two days later), because of the correlation between the two. The overlaying of both series is quite high, but on individual months, the discrepancy can be substantial. Another reason FX traders follow this report is the same as with the NFP – a persistent vigorous growth in employment figures increases inflationary pressures, and with it, the likelihood that the Fed will raise interest rates. Actual figures beating consensus tend to be USD bullish.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named Quantitative Easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
