Gold (XAU/USD) bounced off Tuesday’s lows and kept the uptrend that started in late January. It is now trading near resistance around $5,100. The move followed a weaker US Dollar, as traders stayed cautious ahead of the January US Nonfarm Payrolls report.
The US Dollar eased after weak US Retail Sales and lower labour costs released on Tuesday. These reports increased expectations that the US Federal Reserve could cut rates in the coming months.
Key Data In Focus
The market expects payrolls to show 70K new jobs, up from 50K in December. The Unemployment Rate is expected to stay at 4.4%, while wage growth is expected to slow.
On the 4-hour chart, XAU/USD is trading just below February’s high near $5,100. The 100-period Simple Moving Average is rising, the MACD is above zero, and the RSI is near 60.
A break above $5,100 would support a Gartley Pattern setup, with a target near $5,340. This target lines up with the 78.6% Fibonacci retracement of the late January sell-off. Support is near $4,995, followed by $4,655.
Central banks bought 1,136 tonnes of gold in 2022, worth about $70 billion. This was the largest yearly purchase on record. Gold often moves opposite the US Dollar and US Treasuries, and it can also react to interest rates, risk sentiment, and geopolitical events.
Shifting Macro Backdrop
In early 2025, gold climbed toward $5,100 as weak US data raised hopes for Fed rate cuts. Today, conditions are less clear. Gold is now consolidating around $4,950, and the expectation of near-term rate cuts has faded.
A year ago, employment data was weaker. But the latest January 2026 jobs report showed a surprise gain of 210,000 jobs. This strength, along with recent comments from Fed officials supporting a “higher for longer” rate policy, is pressuring precious metals. A stronger dollar also makes gold more expensive for overseas buyers, which can limit upside.
January’s CPI cooled slightly to 2.8%, but not enough to shift the Fed’s current view that rates should stay steady. This means call options with strikes above $5,100—levels that looked more realistic last year—now carry much higher risk. Traders may consider buying puts or using bearish call spreads to hedge against a move down toward $4,800 support if the US Dollar continues to strengthen.
Even so, central-bank buying helps support prices and may reduce the risk of a sharp drop. In 2025, central banks maintained strong demand and bought over 1,000 tonnes, according to the World Gold Council. Any long-term bearish view should account for this steady source of demand.
With the February jobs report and new inflation data due in the next few weeks, volatility could increase. That backdrop can suit strategies like straddles or strangles, which aim to profit from a large move in either direction. This approach lets traders respond to the market’s reaction to key data without needing to predict the direction in advance.
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