Gold (XAU/USD) is on the rise, currently trading around $4,880 after falling to $4,655 during the Asian session. A cautious market is boosting demand for precious metals, but a strong US Dollar is holding back gains.
US Employment Data and Market Response
Recent weak US employment data has led some to believe the Federal Reserve might lower borrowing costs. A decline in Wall Street has also increased interest in safe havens like Gold.
On a technical level, Gold is trading below the 100-period Simple Moving Average (SMA) at $4,876, but signs show momentum is improving. The MACD’s negative histogram is getting smaller, and the MACD line is nearing the signal line, while the RSI has moved into a neutral range.
Although the short-term trend is still negative, bullish traders see potential due to Thursday’s higher low. The Gartley pattern hints at a target near the 78.6% Fibonacci resistance at $5,340, with initial resistance likely at $4,920 and $5,100.
Central banks are significant Gold buyers, with notable purchases in 2022 from China, India, and Turkey. Gold typically moves in opposition to the US Dollar and Treasuries and is influenced by geopolitical tensions, interest rates, and Dollar behavior.
Risk and Resistance Levels
The market is understandably anxious following this week’s disappointing employment report. January 2026’s Non-Farm Payroll data showed only 95,000 jobs added, far lower than the 180,000 expected, which raised the unemployment rate to 4.2%. This increases the likelihood of a Federal Reserve rate cut in March, with fed funds futures pricing in over a 75% chance.
This situation creates a classic tug-of-war for gold, which is hovering around $4,880. The risk-off sentiment from Wall Street’s recent 4% drop supports Gold, but the strength of the US Dollar restricts its growth. Therefore, traders should seek strategies that take advantage of a potential price increase while managing immediate resistance.
We are noticing a possible Gartley pattern forming on the charts, indicating a potential rally towards the $5,340 mark. To get there, we first need to break through the resistance at $4,920, followed by the $5,100 weekly high. The improving momentum in technical indicators suggests these levels might be tested in the coming weeks.
A practical strategy would be to buy call options to bet on this upward potential. For example, purchasing March or April 2026 calls with a strike price around $5,000 would provide exposure to gains beyond immediate resistance. This strategy limits our risk to the premium paid while offering significant leverage if the target is reached.
This optimistic outlook is supported by strong demand from institutional players. Central banks continued buying aggressively until the end of last year, with World Gold Council data showing an additional 250 tonnes added to reserves in the fourth quarter of 2025, maintaining the record-breaking accumulation trend seen in 2022 and 2023.
However, it’s crucial to watch downside support levels closely to mitigate risk. A clear break below the recent low of $4,655 would raise concerns, while the $4,400 level is even more critical; falling below this would undermine the current bullish technical structure.
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