Gold is currently stable as traders assess mixed economic data from the US and weaker job market signs. The XAU/USD pair is moving sideways near the 21 SMA on the 4-hour chart, indicating a mixed short-term outlook with slowing momentum. Gold is trading at around $4,225, slightly higher after recently dipping below $4,200. The latest US economic data presents a mixed view: the ISM Services PMI rose to 52.6, surpassing expectations, while the ADP Employment Change reported a loss of 32,000 private sector jobs, going against predictions of growth.

Weaker US Labour Conditions

The employment data points to a decline in US labour conditions. Nonfarm Payroll numbers for October and November will be released on December 16, offering limited insights into the job market before the Federal Reserve meets. According to the CME FedWatch Tool, there is an 88% chance of a 25 basis point rate cut, which is exerting pressure on the US Dollar and supporting Gold. In geopolitical news, US-Russia talks over Ukraine have made little headway. In October, central banks increased Gold purchases by 53 tonnes, marking the largest monthly increase of the year. The World Gold Council noted this is 36% higher than in September. Technically, XAU/USD is hitting resistance near the 21 SMA at $4,212.44. Momentum indicators suggest a limited strength in trends. A rise above the 21 SMA is crucial for a bullish outlook.

Gold As A Safe Haven

With recent mixed signals from the US economy, gold is consolidating around the $4,225 mark. The significant drop in private payrolls brings uncertainty ahead of the combined Nonfarm Payroll report on December 16, creating challenges for short-term bets, as any surprising data could lead to higher volatility. The derivatives market shows an 88% chance of a 25-basis-point rate cut next week, keeping downward pressure on the US Dollar. This trend may favor gold call options over puts, as the pathway appears upward as long as this dovish sentiment persists. Following the aggressive rate hikes of 2023, where rates reached a multi-decade high, we are seeing the expected economic slowdown that fuels these expectations. It’s important to note that October’s CPI data showed inflation remaining at a stubborn 4.1%, which is above the central bank’s target. This situation puts the Federal Reserve in a tough spot, making gold a worthwhile hedge against stagflation fears. In this context, holding gold— which doesn’t yield interest—becomes more attractive as other investments may struggle. Looking back, central banks entered a significant buying phase in 2022, purchasing a record 1,136 tonnes of gold. This trend continues, with recent data from the World Gold Council showing net purchases of another 290 tonnes in Q3 2025. This steady buying from central banks helps create a solid price floor and limits downside potential during sell-offs. Support also comes from ongoing geopolitical tensions. The lack of significant progress in US-Russia talks about Ukraine, along with enduring tensions in other global areas, maintains strong demand for safe-haven assets like gold. These factors provide a consistent boost for the precious metal. From a technical perspective, the consolidation near the 21-period moving average suggests that volatility might be temporarily low. Traders could explore strategies like bull call spreads to take advantage of a potential upswing while the broader trend remains positive. The 100-period moving average around $4,134 can be a crucial level for managing risk on any positions. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now