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Gold prices rose on Friday amidst escalating trade tensions between the US and China, along with a mixed US employment report. The XAU/USD pair is currently trading at $2,862, a 0.24% increase.
The prospect of new reciprocal tariffs announced by US officials boosted gold’s safe-haven appeal. Increased tensions could further drive investment towards the precious metal.
US employment data showed January’s Nonfarm Payrolls falling short of expectations, while the Unemployment Rate declined, indicating a still-resilient labor market. This may influence the Federal Reserve’s (Fed) policy decisions.
Gold prices initially surged to a high of $2,886 following the jobs report, but later retraced.
Reports indicate that the People’s Bank of China (PBoC) has increased its gold reserves from 73.29 million ounces to 73.65 million ounces.
Fed officials have maintained a cautious stance. Minneapolis Fed President Kashkari anticipates a “modestly lower” policy rate. Chicago Fed President Goolsbee acknowledged the strong jobs data and expects lower rates, but at a slower pace. Fed Governor Adriana Kugler noted that inflation “has gone sideways” and supports maintaining the current policy rate.
Market Movers:
The US Dollar Index (DXY) rose 0.32% to 108.04. The US 10-year Treasury bond yield increased five basis points to 4.487%. US real yields, which typically move inversely to gold prices, rose three basis points to 2.062%. January’s Nonfarm Payrolls were 143K, below the expected 170K, and the Unemployment Rate fell to 4% from 4.1%. Money market fed funds rate futures suggest 39 basis points of easing by the Federal Reserve in 2025.
Technical Outlook:
Gold prices are trending upwards but have yet to break through the $2,900 resistance level. The Relative Strength Index (RSI) is currently in overbought territory, and price action suggests potential exhaustion. A drop below $2,800 could lead to further support levels at $2,750 and $2,730. Conversely, a move above $2,900 may target resistance at $2,950 and thereafter $3,000.
