Gold fell 0.72% to $5,022 on Tuesday. It stayed above $5,000 as the US Dollar held steady and traders cut short positions. The US Dollar Index (DXY) was unchanged at 96.78, while the 10-year Treasury yield dropped five basis points to 4.149%.
US Retail Sales were weak. December sales were flat (0% month-on-month), down from 0.6% in November and below the 0.4% rise expected. The retail control group slipped -0.1% in December after 0.2% previously, and November data were revised lower.
Fed Cut Expectations Shift
Labour cost data also eased. The Employment Cost Index rose 0.7% in Q4, down from 0.8% in Q3. Markets raised expected Federal Reserve rate cuts in 2026 from 56.5 basis points to 58.5 basis points.
Focus now turns to the Nonfarm Payrolls report due Wednesday, 11 February. Forecasts call for 70K jobs in January versus 50K in December. The unemployment rate is expected to stay at 4.4%, and Kevin Hassett said the jobs number could be “slightly lower”.
Gold has been trading in a $5,000–$5,100 range. Resistance sits at $5,100, then $5,200, $5,451, and near $5,600. Support is at $5,000, the 20-day SMA at $4,910, then $4,800 and $4,402.
Gold’s recent dip, even with weaker economic data, suggests the market is cautious ahead of major news. Traders appear to be waiting for tomorrow’s January Nonfarm Payrolls report before making bigger moves. In this setup, it may be better to prepare for a breakout than to chase the current price.
Options Market Range Strategies
Implied volatility is rising, as options markets expect a sharp move after the jobs report. That makes buying options expensive. Because of this, we are considering strategies that can profit if price stays in a range, such as selling strangles outside the $4,900–$5,150 zone. If the market reaction is mild, those positions could perform well.
If payrolls come in well above the 70K forecast, it would challenge the market’s growing view that the Fed will deliver deep cuts. That could drive a quick US Dollar rally and pull gold lower to test the 20-day moving average near $4,910. A similar move happened in Q3 2025, when a strong jobs report briefly pushed back rate-cut expectations.
If payrolls miss expectations, it would reinforce the weak retail sales and softer labour cost data. That would likely speed up bets on Fed easing. It could also be the catalyst that breaks gold out of its current range and lifts it above $5,100 resistance. If that happens, the path toward the January peak of $5,451 becomes clearer.
No matter what tomorrow’s data show, the broader trend of central bank buying still supports prices. Official 2025 data showed central banks added a net 1,037 tonnes to reserves, the second-highest year on record for physical demand. This steady demand—especially from Asian central banks—should help limit any major sell-off.
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