Gold prices appear poised to recover further, potentially revisiting the December high of $2726, as they extend a series of higher highs and lows this week. However, the precious metal faces potential range-bound conditions, with the 50-day Simple Moving Average (SMA) around $2650 losing its upward slope.
Gold’s Price Performance and Market Drivers
Gold has rebounded from its weekly low of $2615, staging a three-day rally. This recovery may gain further support as concerns about policy missteps by major central banks bolster gold’s appeal as an alternative to fiat currencies.
Key developments in the U.S. economy could play a critical role in influencing gold’s trajectory. The upcoming U.S. Non-Farm Payrolls (NFP) report is expected to reveal a slowdown in job growth, with projections indicating a rise of 160,000 in December compared to the previous month’s 227,000. Signs of easing job market growth may prompt the Federal Reserve to continue relaxing its restrictive policies, especially as projections point to a federal funds rate of 3.9% by the end of 2025.
Conversely, if the NFP report exceeds expectations, gold could experience a further rebound as market speculation about potential policy errors increases.
Key Technical Levels for Gold (XAU/USD)
Gold’s price momentum suggests a potential test of the December high at $2726. A decisive break above $2730, a significant Fibonacci extension level, could pave the way for further gains, bringing the November high at $2762 into focus.
If bullish momentum continues, a breach above $2790 (50% Fibonacci extension) may target the $2850 level (61.8% Fibonacci extension). However, failure to sustain gains above $2730 could keep gold trading within the November range.
On the downside, a lack of momentum to hold above the $2630 to $2660 zone may push prices back towards $2590, with the December low of $2584 emerging as a critical support level.
What to Watch
Gold’s price action will likely be influenced by upcoming U.S. economic data, particularly the NFP report, which could shape expectations for Federal Reserve policy. Traders should monitor these developments closely as they assess the potential for further recovery in gold prices.
