Gold Price Forecast: XAU/USD looks to retest $4,250 ahead of critical US data

Gold builds on Tuesday’s late rebound above $4,200 early Wednesday, setting eyes back on $4,250.
US Dollar loses ground alongside Treasury bond yields amid dovish Fed bets and fresh geopolitical concerns.
Gold’s path of least resistance appears to the upside, as seen in the daily chart.

Dhwani Mehta FXStreet

Gold is back in the green above $4,200 early Wednesday, following a temporary pullback on Tuesday, as buyers refuse to give up heading into the top-tier US ADP Employment Change and US ISM Services PMI data releases.

Gold regains upside momentum, as key US data loom

The overnight weakness in the US Dollar (USD) extends into Asia, allowing Gold to gather upside traction.

The USD faces headwinds from expectations surrounding an imminent interest rate cut by the US Federal Reserve (Fed) next week, as well as from the latest chatter that the White House Economic Adviser Kevin Hassett is seen as President Donald Trump’s top pick to become the next Fed Chairman.

On Tuesday, Trump said that he had narrowed the list down to one, and he later mentioned Hassett as a potential Chairman.

Hassett is known to be a relentless dove, and hence, this chatter seems to bode well for the non-yielding Gold at the expense of the USD.

Further, Gold also capitalizes on renewed geopolitical tensions surrounding the Russia-Ukraine peace talks and upbeat China’s RatingDog Services PMI data.

The Kremlin said on Wednesday that Russia and the US failed to reach a compromise on a possible peace deal to end the war in Ukraine after a five-hour Kremlin meeting between President Vladimir Putin and Donald Trump's top envoys.

Putin's top foreign policy aide, Yuri Ushakov, said, "compromises have not yet been found. "There is still a lot of work to be done," Ushakov added.

Meanwhile, the RatingDog China General Services PMI, compiled by S&P Global, fell to 52.1 from 52.6 in October, marking the weakest expansion since June. The reading, however, surpassed expectations for a drop to 52. Note that China is the world’s top yellow metal consumer.

Looking ahead, the next leg higher in Gold hinges on the upcoming monthly US ADP Employment Change data and the ISM Services PMI, which could double down on the dovish Fed bets beyond the December monetary policy meeting.

Gold price technical analysis: Daily chart

In the daily chart, the 21-day Simple Moving Average (SMA) rises and sits above the 50-, 100-, and 200-day SMAs, while the longer averages also advance. Price holds above these averages, with the 21-day SMA at $4,117.64 offering nearby dynamic support. The Relative Strength Index (RSI) at 62.86 remains positive and edges higher, reinforcing upward momentum.

Measured from the $4,381.17 high to the $3,885.84 low, the 61.8% retracement at $4,191.95 has been surpassed, while the 78.6% retracement at $4,275.16 caps the next upside attempt. A sustained break above the latter would extend the advance, whereas a pullback below the former could slow momentum back toward the short-term average.

(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.

Why it matters to traders?

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.

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.

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