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Gold remains on the defensive as traders look to US NFP report for Fed rate cut cues

  • Gold struggles to gain any meaningful traction as traders await the US NFP report.
  • An extension of the recent USD move up acts as a headwind for the commodity.
  • Dovish Fed bets and geopolitical risks offer support to the safe-haven XAU/USD.

Gold (XAU/USD) sticks to mildly negative bias through the first half of the European session, though it lacks bearish conviction as opt to wait on the sidelines ahead of the highly anticipated US Nonfarm Payrolls (NFP) report. The crucial US jobs data will be looked upon for cues about the US Federal Reserve's (Fed) rate-cut path. This, in turn, would play a key role in influencing the near-term US Dollar (USD) price dynamics and provide a fresh impetus to the non-yielding yellow metal.

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Heading into the key US data risk, the USD prolongs a two-week-old uptrend and advances to a one-month top, exerting some downward pressure on the Gold. That said, rising bets for more interest rate cuts by the US central bank, along with persistent geopolitical uncertainties, act as a tailwind for the safe-haven precious metal. The mixed fundamental backdrop, in turn, holds back traders from placing fresh directional bets and leads to a subdued/range-bound price action.

Daily Digest Market Movers: Gold traders seem non-committal amid mixed cues, ahead of US NFP

  • The US Dollar touches its highest level since December 10 during the Asian session on Friday and exerts some pressure on the Gold price amid some repositioning ahead of the key US Nonfarm Payrolls report.
  • US Treasury Secretary Scott Bessent said on a CNBC interview on Thursday that lowering interest rates is the only ingredient missing for even stronger economic growth, which is why the Fed should not delay.
  • Meanwhile, traders are pricing in the possibility that the US central bank will lower borrowing costs in March and cut rates again later this year. This could offer support to the non-yielding yellow metal.
  • Traders, however, await more cues about the Fed's rate-cut path before placing fresh directional bets. Hence, the focus will remain glued to the release of the highly anticipated US monthly jobs data later today.
  • The US economy is expected to have added 60K new jobs in December, down from 64K in the previous month, though the Unemployment Rate is seen edging lower to 4.5% from 4.6% recorded in November.
  • In the meantime, heightened geopolitical uncertainties on the back of the US incursion in Venezuela, a diplomatic spat between China and Japan, and the protracted Russia-Ukraine war, might also support the XAU/USD pair.
  • In a wide-ranging interview with The New York Times on Wednesday, President Donald Trump said that he expected the US would be running Venezuela and extracting oil from its huge reserves for years.
  • Separately, China escalated its dispute with Japan, restricting exports of rare earths and rare-earth magnets to Japan. The ban follows the recent Taiwan-related remarks by Japan’s Prime Minister.
  • German Chancellor Friedrich Merz said that an end to a nearly four-year war in Ukraine was quite far away, given Russia’s position, calling the plan for European troops to be deployed in Ukraine dangerous.

Gold technical setup warrants caution for aggressive bulls; $4,500 holds the key

Chart Analysis XAU/USD

The XAU/USD pair holds above the rising 200-period Exponential Moving Average (EMA), currently pegged near $4,322.58, keeping the broader bias tilted higher. The average’s upward gradient underpins pullbacks. The Moving Average Convergence Divergence (MACD) line remains below the Signal line and beneath the zero mark, though it is turning higher. The negative histogram is contracting, suggesting fading bearish pressure.

RSI at 56 sits above the neutral 50 line, aligning with improving momentum without signaling overbought conditions. If momentum continues to firm, bulls could extend the recovery, while dips would be cushioned by the prevailing trend. Holding above $4,322.58 would preserve the bullish tone, whereas a decisive break below that average would open a deeper retracement.

(The technical analysis of this story was written with the help of an AI tool)

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews ​and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Read more.

Next release: Fri Jan 09, 2026 13:30

Frequency: Monthly

Consensus: 60K

Previous: 64K

Source: US Bureau of Labor Statistics

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Author

Haresh Menghani

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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