Gold is seeing a slight rise but is having a hard time breaking the $5,000 mark. Support for gold is coming from expectations of interest rate cuts by the Federal Reserve. The XAU/USD pair might be setting up a pattern aiming for $5,340.
The weakness of the US Dollar helps gold stay above $4,960. Recent US employment data suggests possible challenges ahead for the job market, raising the chances that the Federal Reserve will cut rates.
Technical Analysis
Looking at a 4-hour chart, XAU/USD shows an upward trend supported by a 100-period Simple Moving Average (SMA) near $4,950. Positive signals indicate the formation of a Gartley pattern targeting $5,340. However, if the price drops below $4,655, this outlook could change, possibly leading to February’s low of $4,400.
Gold is valued for its long history as a safe investment and is considered a refuge during uncertain times. It acts as protection against inflation and currency decline. Central banks are the largest holders of gold, adding 1,136 tonnes in 2022. Gold prices are influenced by factors such as geopolitical events, interest rates, and the strength of the US Dollar.
Gold often moves in the opposite direction of the US Dollar and US Treasuries, and changes in the stock market can also impact gold prices adversely.
With gold staying above $4,960, there is a clear bullish trend, supported by expectations of Federal Reserve rate cuts. The price is currently hovering near the important $5,000 level, indicating a potential consolidation phase before the next move. This presents a chance for traders to prepare for the expected C-D leg of the harmonic pattern.
Market Environment
Last week’s employment data strengthened the case for lower interest rates, confirming the slowdown in the labor market that we noticed in late 2025. The January jobs report significantly missed expectations, increasing speculation that the Fed might act soon to support the economy. This has weighed on the US Dollar, which further benefits gold.
This market context suggests that traders consider bullish strategies that take advantage of the expected rise toward the $5,340 target. Buying call options with strike prices above $5,100 could provide a way to leverage this forecast. To manage costs, we could create a bull call spread by selling a higher-strike call, likely around the $5,340 resistance level.
On a fundamental level, high gold prices are supported by strong institutional demand that has continued from last year. Central banks have kept buying aggressively throughout 2025, with totals showing they added over 1,000 tonnes for the third consecutive year. This ongoing demand creates a solid base for gold, reducing the risk of sharp sell-offs.
Nonetheless, we must stay alert to key technical levels that could change this bullish outlook. If the price drops below the 100-period SMA around $4,950, it would signal caution. A confirmed break below Friday’s low of $4,655 would indicate a major trend reversal and might prompt us to hedge long positions with put options.
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