Gold price hovers near a multi-week high despite a strong USD, showing potential for further gains

Gold price (XAU/USD) regains upward momentum after an intraday dip to the $2,655 level but struggles to sustain gains, remaining below a four-week high during the early European session on Thursday. The US Dollar (USD) remains strong near a two-year high, buoyed by the Federal Reserve’s (Fed) hawkish stance on slowing the pace of rate cuts in 2025. This limits the upside for the non-yielding yellow metal. However, a combination of factors continues to support Gold and sustains the near three-week-long uptrend.

Ongoing geopolitical tensions and concerns over President-elect Donald Trump's proposed tariff policies weigh on investor sentiment, fostering a cautious market environment that benefits safe-haven assets like Gold. Additionally, a modest pullback in US Treasury bond yields curbs enthusiasm among USD bulls, further supporting the positive outlook for XAU/USD. Market participants will now focus on speeches from key Federal Open Market Committee (FOMC) members for additional cues ahead of Friday’s crucial US Nonfarm Payrolls (NFP) report.

Gold Price Steady Amid Softer Risk Sentiment and Declining US Bond Yields

• The Gold price finds support as a softer risk tone and retreating US bond yields provide a favorable backdrop.
• The Automatic Data Processing (ADP) report revealed that private sector payrolls in the US rose by 122,000 in December, falling short of November's 146,000 increase and missing expectations of 140,000. Meanwhile, a separate Labor Department report showed Initial Jobless Claims at 201,000 for the week ending January 4, the lowest level since February 2024, indicating a stable labor market.
• Minutes from the Federal Reserve's (Fed) December meeting highlighted policymakers’ views that labor market conditions are gradually easing. The minutes also revealed support for slowing the pace of rate cuts amid stalled disinflation.
• The yield on the benchmark 10-year US Treasury climbed to its highest level since April 2024 on Wednesday, bolstering the US Dollar, which remains near a two-year high. This strength in the USD continues to weigh on the Gold price.
• On the geopolitical front, CNN reported that US President-elect Donald Trump is considering declaring a national economic emergency to justify universal tariffs on both allies and adversaries. Meanwhile, Ukrainian forces faced significant losses under heavy Russian assaults, with Russia's Defense Ministry claiming victories in Seversk and Chasov Yar. In the Middle East, Israeli airstrikes intensified across the West Bank following an attack that killed three Israelis, with the Israeli military recovering a hostage's body from southern Gaza.
• Looking ahead, investors await speeches from several influential Federal Open Market Committee (FOMC) members for short-term market direction. However, the spotlight remains on Friday's highly anticipated US Nonfarm Payrolls report.

Gold Price Bulls Maintain Momentum, Dip-Buying Likely to Limit Corrective Declines

From a technical standpoint, the overnight swing high near the $2,670 level now serves as an immediate resistance. A decisive break above this level could act as a fresh catalyst for bullish traders, potentially pushing Gold prices toward intermediate resistance in the $2,681-$2,683 range, with a further move toward the $2,700 psychological mark.

On the downside, any corrective pullback is expected to find initial support near the $2,645 level, followed by the $2,635 region and the weekly low around $2,615-$2,614, touched on Monday. Sustained selling below the $2,600 confluence zone—comprising the 100-day Exponential Moving Average (EMA) and a short-term ascending trend line extending from the November low—could signal a shift in sentiment. In this scenario, Gold may become vulnerable to further declines, testing the December swing low around $2,583 and potentially targeting the next key support near the $2,550 level.