08.01.202618:45 Forex Analysis & Reviews: XAU/USD. Analysis and Forecast

Gold is declining; however, the lack of clear fundamental reasons for the drop is likely due to profit-taking ahead of Friday's US Nonfarm Payrolls report. These key figures will significantly influence expectations for Fed rate cuts and boost US dollar volatility, giving the yellow metal a new directional impulse.

At the same time, growing acceptance of two Fed rate cuts this year prevents the US dollar from holding on to its weekly gains. Risk appetite is beginning to weaken due to escalating geopolitical tensions, which could lend support to gold as a safe-haven asset and slow its decline. Therefore, it is prudent to wait for a strong continuation of selling before opening bearish positions in XAU/USD.

Market reaction to the reported US arrest of Venezuelan President Nicolas Maduro over the weekend has faded, triggering a second day of profit-taking in gold on Thursday. However, a combination of factors may restrain bearish pressure on XAU/USD and limit further downside. US President Donald Trump warned Colombia and Mexico of possible military measures as part of efforts to combat criminal groups and regional instability. Secretary of State Marco Rubio reaffirmed commitment to plans to seize Greenland, leaving a military option on the table for Trump.

The lack of progress in Russia–Ukraine talks, unrest in Iran, and the situation in Gaza continue to fuel geopolitical risks, which are favorable for gold as a safe-haven asset. Together with expectations of a Fed rate cut in March and another by year-end, this should help cap the metal's losses.

The Institute for Supply Management reported an unexpected pickup in US services activity in December, with the non-manufacturing PMI rising to 54.4 from 52.6 in November. However, the positive data were offset by weak labor market figures. The ADP report showed private-sector employment increasing by just 41K in December after a decline of 29K (revised from -32K) in November, versus a forecast of +47K. JOLTS data indicated job openings fell to 7.146 million in November.

For opening new positions, it is advisable to wait for Friday's US Nonfarm Payrolls report. These data will adjust expectations regarding Fed monetary policy, increase dollar volatility, and give gold fresh momentum.

Thursday will also bring US weekly initial jobless claims, which could create short-term opportunities in XAU/USD during the North American session. However, the current fundamental backdrop calls for caution until sustained selling is confirmed.

From a technical perspective, gold is holding above the 9-day EMA, while oscillators remain positive, confirming the strength of the bulls in the current environment. The key resistance for XAU/USD stands at $4500; a break above this level would open the way toward a record high.

The nearest support for gold is at $4440, where the 14-day EMA is located. Below it lies the 20-day SMA, after which prices could accelerate their decline toward the psychological level of $4300.