Gold sticks to bullish bias; eyes $5,100 as safe-haven demand persists ahead of US data

Gold scales higher for the second straight day as renewed US-Iran tensions boost safe-haven demand.
Fed rate cut bets keep the USD bulls on the defensive and also benefit the non-yielding yellow metal.
Traders now look forward to the US ADP report and ISM Services PMI to grab short-term opportunities.

Haresh Menghani FXStreet

Gold (XAU/USD) advances to a fresh weekly high during the first half of the European session on Wednesday, with bulls now looking to reclaim the $5,100 mark amid a supportive fundamental backdrop. Concerns over rising tensions between the US and Iran resurfaced following overnight reports that the US shot down an Iranian drone in the Arabian Sea. This forces investors to take refuge in traditional safe-haven assets and benefits the precious metal.

The momentum is further aided by prospects for lower US interest rates, which caps the recent US Dollar (USD) recovery from a four-year low and continues to push the non-yielding Gold higher for the second consecutive day. With the latest leg up, the XAU/USD pair has now rallied over $675 from the $4,400 neighborhood, or a four-week low, touched on Monday. Traders now look to the US ADP report and the US ISM Services PMI for a fresh impetus.

Daily Digest Market Movers: Gold bulls regain control amid sustained safe-haven buying, dovish Fed bets

A US Central Command spokesman said on Monday that a US Navy fighter jet shot down an Iranian drone in self-defense after it moved toward the aircraft carrier USS Abraham Lincoln in the Arabian Sea. This undermines the optimism over the US-Iran nuclear talks later this week on Friday and assists the safe-haven Gold to register its biggest daily rise since November 2008.
US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve chair fueled speculations that the central bank will be less dovish than expected. Traders, however, are still pricing in the possibility of two more rate cuts by the Fed this year, which keeps the US Dollar bulls on the defensive and benefits the non-yielding bullion for the second consecutive day.
Meanwhile, Fed Governor Stephen Miran said on Tuesday that the underlying inflation is not a problem and that the US central bank needs to cut rates by about a percentage point this year. Separately, Richmond Fed President Thomas Barkin noted that inflation remains above target, but further progress is expected, and the economy remains remarkably resilient.
Trump on Tuesday signed a spending deal into law that restores lapsed funding for defense, healthcare, labor, education, housing, and other agencies, and temporarily extends funding for the Department of Homeland Security until February 13. This
This ends a partial US government shutdown and gives lawmakers time to negotiate potential limits on his immigration crackdown.
The closely watched US Nonfarm Payrolls report for January will not be released this Friday. However, Wednesday's release of the US ADP report on private-sector employment should offer a fresh insight into the health of the labor market. Apart from this, the US ISM Services PMI might influence the USD demand and provide some impetus to the XAU/USD pair.

Gold seems poised to strength further while above 50-SMA on H4

An intraday breakout through the 50% retracement level of the recent sharp corrective decline from the $5,600 neighborhood, or the all-time peak, could be seen as a fresh trigger for bullish traders. Some follow-through buying beyond the 50-period Simple Moving Average (SMA) would validate the constructive outlook and allow the Gold price to appreciate further. The Moving Average Convergence Divergence (MACD) line stands above the Signal line and in positive territory, with a widening positive histogram that suggests strengthening bullish momentum. The Relative Strength Index (RSI) prints 55.83 (neutral) and edges higher, aligning with an improving tone.

Bias leans mildly higher as the 50-period SMA’s nascent upturn supports dips and price action builds above it. Momentum improves, with MACD remaining positive and the histogram expanding, while the RSI holding above 50 reinforces a recovery stance; however, overhead Fibonacci resistance tempers follow-through. A sustained close beyond that barrier would open further upside, whereas a drop back below the moving average would undermine the bounce and shift focus back to recently reclaimed retracement territory.

(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

Haresh Menghani

FXStreet

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

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