Gold between profit-taking and geopolitical supports: what to expect before the NFP?

Gold price (XAU/USD) pulls back from psychological levels of US$ 4,500 after a strong upward move recorded midweek, as investors begin to take profits and reassess their positions. Although the metal has benefited from a high-risk environment and dovish expectations from the Fed, technical consolidation near this level suggests caution among market participants.

What keeps gold on hold?

The gold market dynamics are caught between two opposing movements. On one side, escalating geopolitical tensions — reignited by US actions in the region and statements from the US president about possible military interventions in Greenland, Colombia, and Mexico — continue to boost demand for safe-haven assets. Additionally, the Russia-Ukraine conflict, instability in Iran, and issues in Gaza keep risk premiums high, acting as catalysts for seeking safe havens.

On the other side, profit-taking after the strong recovery over the last two trading sessions pressures the gold price downward. Investors also remain in a wait-and-see stance ahead of the crucial US macroeconomic calendar, awaiting clearer signals on interest rate trajectories before repositioning their portfolios.

The rate cut bet fuels gold

Expectations of interest rate cuts by the Federal Reserve play a central role in the gold price dynamics. According to data from CME Group’s FedWatch tool, the market prices in a probability of the Fed lowering borrowing costs as early as March, with a possibility of another cut by year-end. A weaker US dollar — a natural consequence of lower rates — makes gold more accessible to international investors and enhances its gains.

Richmond Fed President Thomas Barkin emphasized that any future rate adjustments should be aligned with emerging data, considering risks to employment and inflation targets. This stance leaves room for monetary easing if economic indicators show signs of slowdown.

Macroeconomic data will be decisive

The next major test for the gold price will come with the release of the non-farm payrolls (NFP) report scheduled for Friday, followed by consumer inflation figures on the subsequent Tuesday. These indicators will be crucial to confirm or disprove the market’s dovish expectations regarding the Fed.

Before that, Wednesday’s economic calendar — including the ADP private employment report, ISM services PMI, and JOLTS job openings — could provide important clues about the health of the US labor market, directly influencing sentiment toward the yellow metal.

Technical analysis: where to look for support?

From a technical perspective, gold finds support near the congestion zone between US$ 4,450 and US$ 4,445. The 100-hour simple moving average is below current prices, offering a structural support level close to US$ 4,400 in case of increased pressure.

The MACD indicator is in negative territory, with the histogram expanding downward, suggesting downward momentum. The Relative Strength Index (RSI) has fallen to 48.58, indicating neutrality and a balance between buyers and sellers. For gold to regain strength, a MACD bullish crossover and an RSI above 50 would be necessary, signaling renewed bullish momentum.

As long as the price remains above the rising 100-hour SMA, declines tend to be limited. However, a close below this baseline would open the door to deeper tests and increase short-term selling pressure.