Is investing in gold worth it at this moment? Support factors face profit-taking before NFP

Gold (XAU/USD) reaction in recent days raises an important question for investors: is it still worth investing in gold? Although the precious metal faces selling pressure for the second consecutive day, retreating to nightly lows during the Asian session, the underlying fundamentals suggest caution before making aggressive bearish bets.

Why does investing in gold still make sense?

The current price pressure mainly reflects profit-taking, not a fundamental change in the scenarios supporting the metal. Several factors continue to support investments in gold as a wealth preservation strategy:

Escalating geopolitical risks: The lack of progress in negotiations between Russia and Ukraine, combined with tensions in Iran, instability in Gaza, and US military threats against Colombia and Mexico, keep geopolitical volatility high. This reality reinforces demand for gold as a traditional safe haven.

Dovish outlook from the Federal Reserve: Market bets point to two interest rate cuts by the US this year, possibly starting in March. This expectation weighs on the US dollar and supports gold, which does not generate yield and benefits from lower real rates.

Mixed macroeconomic data: Although the services sector surprised positively in December – with the Non-Manufacturing Purchasing Managers Index rising from 52.6 to 54.4 – the labor market showed weakness. ADP data revealed an increase of only 41,000 private sector jobs in December, below the 47,000 expected. Job openings also fell to 7.146 million in November.

Timing matters: Why wait for the NFP?

The release of the US non-farm payrolls (NFP) report on Friday will be crucial. Traders are deliberately avoiding aggressive positions before this data, as employment details will determine expectations about the Fed’s policy path and, consequently, the performance of the US dollar and gold.

Meanwhile, weekly initial jobless claims data may create short-term trading opportunities. However, the overall scenario recommends caution before positioning for further declines in XAU/USD.

Technical analysis: Where are the critical supports?

From a technical perspective, the confluence of $4,425 – formed by the 100-hour Simple Moving Average and the 38.2% Fibonacci retracement level – provides important support. A convincing break below this level could trigger technical selling, pushing the pair toward $4,400.

Technical indicators signal downward momentum in formation: the MACD line is below the signal line and in negative territory, with the histogram expanding negatively. The Relative Strength Index at 40 remains neutral to bearish and declining, indicating limited upside.

Immediate recoveries will face resistance at the 23.6% Fibonacci level, near $4,450. Failure to sustain above the 38.2% support would prolong the correction, despite the positive trend of the SMA.

Is it worth investing in gold now?

The answer depends on the investment horizon. For short-term trading, prudence suggests waiting for the NFP for clearer direction. For medium- to long-term investors concerned with wealth protection, the combination of elevated geopolitical risks, rate cut expectations, and US dollar weakness continues to underpin the case for investing in gold. The current decline potentially offers a better entry point, provided that critical technical levels are respected.