Gold prices face pressure from a stronger dollar, but geopolitical risks provide support ahead of NFP

A gold price (XAU/USD) struggles to hold Thursday’s gains, retreating from the US$ 4,400 mark, while the US dollar (USD) consolidates its two-week rally and reaches its highest level in about a month. This movement hampers the appreciation of the precious metal, which operates without yield.

Despite dollar pressure, the dovish outlook from the US Federal Reserve (Fed) acts as a brake on sharper declines in the gold price. Expectations of rate cuts in March and further reductions throughout the year provide some support to the asset. Traders await clearer signals on the US monetary policy path, which is expected to come with the non-farm payrolls report (NFP) scheduled for today.

US employment data and geopolitics in focus

The monthly employment report will be decisive in repositioning bets on the USD and gold. The US economy is expected to have created 60,000 new jobs in December, below the 64,000 in November, while the unemployment rate may fall from 4.6% to 4.5%.

Meanwhile, rising geopolitical tensions offer protection to the yellow metal as a safe-haven asset. The US incursion into Venezuela, the diplomatic conflict between China and Japan (with Chinese restrictions on rare earth exports), and the prolongation of the Russia-Ukraine war keep traders alert to external risks that tend to boost gold demand.

Technical outlook for XAU/USD

The gold price remains above the 200-period exponential moving average (EMA), set at approximately US$ 4,322.58, supporting the long-term bullish trend. The upward slope of the EMA acts as a dynamic support for retracements.

The MACD indicator remains below the signal line and below zero, but is in an upward trend. The negative histogram shows contraction, indicating a reduction in downside pressure. The RSI at 56 is above the neutral 50 line, aligned with improved momentum without signaling overbought conditions.

For buyers to regain control of the gold price, acceptance above US$ 4,500 is necessary. Maintaining above US$ 4,322.58 preserves the bullish scenario. A decisive break below this average would open space for a deeper retracement.

US dollar performance this week

The USD showed notable strength against major pairs. The dollar gained 0.92% against the Swiss franc (CHF), 0.90% against the Japanese yen (JPY), and 0.60% against the euro (EUR). The US currency also strengthened against the British pound (GBP), with a variation of 0.24%, while it declined 0.30% against the Canadian dollar (CAD).

Traders remain cautious and await greater clarity on the Fed’s next move. Until then, the gold price is expected to continue oscillating between technical supports and the resistance of US$ 4,500, with dynamics dependent on both monetary signals and geopolitical developments.