Gold fell to around $5,045 in early Asian trading on Wednesday after a sharp sell-off. Markets are focused on the delayed US January jobs report, which was pushed back because of a four-day government shutdown.
Stronger risk appetite and a firmer US dollar could keep pressure on gold. However, tensions between the United States and Iran may limit further declines.
Us Iran Tensions In Focus
Donald Trump said Iran could face military action if it does not meet US demands on nuclear enrichment and ballistic missiles. Iran’s security chief, Ali Larijani, met Oman’s sultan, Haitham bin Tariq Al Said, after talks between US and Iranian officials last week.
Traders are also waiting for US inflation data and any news that could affect Federal Reserve policy. Wednesday’s jobs report is expected to show Nonfarm Payrolls rising by 70,000 in January, with unemployment unchanged at 4.4%.
US CPI inflation data is due on Friday. A softer reading could weaken the dollar and support dollar-priced gold. Gold is often used to preserve value and to hedge against inflation and currency weakness.
Central banks are the largest holders of gold and have increased reserves in recent years. They added 1,136 tonnes worth about $70 billion in 2022, the biggest annual purchase on record.
Central Bank Buying Supports The Floor
Gold has taken a hard hit, falling to around $5,045. The key question now is whether this level will hold. The delayed US Nonfarm Payrolls report is the main near-term driver, because it could set off the next big move. A weak result, such as the expected 70,000 jobs, could spark a rebound. A much stronger report could push prices lower.
US-Iran tensions may also help put a floor under gold, limiting downside risk. Open interest in call options with strike prices above $5,100 has risen 8% over the past week. This suggests some traders are positioning for a possible flare-up. The setup is similar to the sharp price spikes seen during Middle East escalations in 2024 and 2025.
After the jobs report, Friday’s Consumer Price Index will be just as important for expectations around the Fed. January core CPI was slightly higher than expected at 3.1%. Another strong reading could support the US dollar and weigh on gold. The dollar index is also worth watching, as its recent move above 105 points to underlying strength.
Steady central bank demand continues to provide longer-term support. The World Gold Council’s final report for 2025 showed central banks added another 950 tonnes to reserves, the third-highest year on record. This kind of buying suggests large sovereign players may treat big price dips as opportunities.
With mixed signals and major data risk ahead, a rise in volatility looks likely. The market is already pricing in a larger move, with implied volatility on at-the-money March options rising to a three-month high. Traders may consider strategies such as straddles, which aim to benefit from a large swing in either direction after this week’s data releases.
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