The strength of the robust dollar limits the momentum of gold ahead of the crucial US employment data

Precious metal faces resistance this Friday, giving up ground against a US dollar that consolidates its gains over the past fifteen days. Gold prices remain under tension after a modest recovery above US$ 4,400, with sellers reappearing during the Asian trading session. This dynamic reflects a scenario where dovish monetary policy expectations from the Federal Reserve act as a partial brake on currency strengthening, creating a fragile balance that could be broken with the upcoming US labor market figures.

The currency scenario: dollar rising but contained by Fed expectations

The USD reached its highest level since early December, significantly pressuring gold prices on the short-term chart. However, dovish signals from the US central bank temper more aggressive currency appreciation bets. Traders price in the possibility that the Fed will start rate cuts as early as March, followed by further reductions by the end of the year, which historically supports gold, an asset without yield that benefits from lower interest rates.

Recent statements from Treasury Secretary Scott Bessent reinforce this view, arguing that lowering borrowing costs is the missing component for more robust economic acceleration. This stance creates room for the yellow metal to find some technical support, even under the pressure of a stronger dollar.

US employment is the next price crossroads

The non-farm payroll data (NFP) released today will be decisive in shaping the next chapter for gold prices and dollar dynamics. The market estimates the creation of 60,000 new jobs in December, below the 64,000 recorded in November, while the unemployment rate is expected to decline from 4.6% to 4.5%.

These numbers will not only influence market assessment of US economic health but also provide crucial signals about the pace of Fed policy inflows. Any weaker result could support gold, encouraging bets on more frequent rate cuts. Conversely, a strong employment report would reinforce the view of a resilient economy and could push the metal even higher.

Geopolitical tensions offer an alternative safe haven

Alongside the economic calendar, geopolitical uncertainties gain weight as a supporting factor for gold as a refuge asset. The escalating Sino-Japanese dispute, with China restricting rare earth exports to Japan in response to Japanese Prime Minister’s comments on Taiwan, reinforces regional volatility. Similarly, the prolonged conflict between Russia and Ukraine remains a latent risk, while recent comments from President Trump about US administration in Venezuela add an extra layer of geopolitical uncertainty.

These factors act as a counterbalance to currency pressures, providing a lower ceiling for more pronounced declines in gold prices during the session, albeit moderately.

Technical analysis of the chart: XAU/USD maintains an upward trend structure

On the gold chart, the XAU/USD pair remains positioned above the 200-period exponential moving average (EMA), quoted at approximately US$ 4,322.58, supporting the longer-term bullish framework. The upward slope of this average continues to dampen retracements, indicating that buyers maintain structural control of the asset.

The moving average convergence/divergence (MACD) remains below both the signal line and the zero mark but is trending upward. The negative histogram contraction signals weakening selling pressure. The relative strength index (RSI), at 56, is above the neutral 50 mark, suggesting moderate momentum improvement without signaling overbought conditions that would require caution.

If momentum continues to strengthen, optimists may extend the recovery, with dips absorbed by the prevailing trend. The critical support remains at US$ 4,322.58; a decisive break below this level would open the way for deeper retracement. Above, the historic highs from December near US$ 4,500 represent the next relevant resistance zone.

Main currency dynamics: dollar leads weekly gains

The US dollar appreciated 0.60% against the euro during the week, while gaining 0.92% against the Swiss franc, its best relative performance. Against the British pound, the USD advanced 0.27%, and against the Japanese yen, 0.90%. The US currency only declined 0.30% against the Canadian dollar, consolidating its position as the main beneficiary of recent currency dynamics. This broad USD strength reinforces the challenges faced by gold prices, making the upcoming NFP result particularly important for a potential reversal of this dynamic.

Technical analysis produced with support from computational data processing tools