Gold is consolidating recent gains around the $5,000 level, with buyers gradually building momentum for a potential sustained uptrend as a pivotal week gets underway. Market attention is firmly on the delayed U.S. Nonfarm Payrolls report due Wednesday and the Consumer Price Index data scheduled for release on Friday.
Fundamental Analysis
As the new, data-heavy week begins, dovish sentiment surrounding the U.S. Federal Reserve is setting the tone, with renewed reflation trades helping gold extend Friday’s strong rebound from the $4,650 area.
After last week’s weak U.S. labor data, markets have continued to price in the first Fed interest-rate cut as early as June, even as investors remain divided over the likely policy stance of Fed chair nominee Kevin Warsh.
Risk appetite has also been supported by a resurgence in reflationary trades, sparked by Japan’s ruling Liberal Democratic Party securing a decisive majority in snap elections. The outcome has reinforced expectations of debt-funded fiscal stimulus, further underpinning the broader reflation theme.
Adding to gold’s support, the U.S. dollar has softened amid renewed weakness in USD/JPY following strong verbal intervention from Japanese authorities. The resulting dollar pressure has helped keep the precious metal buoyant.
That said, gold’s recovery momentum appears somewhat constrained as overall risk sentiment remains upbeat on expectations of expansionary fiscal policies in Japan. Japanese equity markets have surged to record highs, lifting broader Asian stocks and reducing demand for traditional safe havens.
Looking ahead, it remains uncertain whether gold can sustain its rebound, as traders may grow more cautious and adjust positions ahead of Wednesday’s closely watched U.S. January jobs report.
XAU/USD Technical Overview
On the daily chart, XAU/USD is trading around $5,023.88, with the technical structure firmly tilted to the upside. The 21-day Simple Moving Average (SMA) has crossed above the 50-, 100-, and 200-day SMAs, and all are sloping higher, highlighting a strong and well-established bullish trend. Prices remain comfortably above these moving averages, keeping buyers in control.
Momentum indicators also support the constructive outlook. The Relative Strength Index (RSI) is at 57.72, holding above the neutral 50 level and well below overbought territory, suggesting steady positive momentum without signs of exhaustion. Immediate dynamic support is provided by the rising 21-day SMA at $4,873.06.
This bullish alignment implies that any pullbacks are likely to be limited as long as prices stay above the faster moving average. A daily close below the 21-day SMA would signal a deeper corrective move, potentially exposing the 50-day SMA near $4,563.97. For now, the continued rise in medium- and long-term SMAs favors a buy-on-dips approach and keeps the broader trend firmly pointed higher.
Sources: Fxstreet
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