Gold Corrects, NFP Decisive!
Gold prices (XAU/USD) returned to selling pressure for the second consecutive day during Thursday's Asian session. However, the decline appeared limited as there were no major fundamental triggers that significantly altered market sentiment.
This selling action was largely interpreted as profit-taking ahead of important US data. After the previous strong rally, some market participants chose to lock in profits while awaiting confirmation of the next direction.
On the other hand, support for gold remains, as rising geopolitical risks have begun to dampen global risk appetite. When markets begin to relax, safe-haven assets like gold are often sought again, narrowing the downside.
Another factor contributing to the weakening was market expectations regarding the Fed, which remain dovish. Mixed US data on Wednesday did not dispel expectations that the US central bank could still deliver two interest rate cuts this year, making it difficult for the dollar to continue its strong gains—and this tends to help gold.
Geopolitical tensions have also not subsided: from the Venezuela issue, which initially triggered the activation of safe havens but then subsided, to the threat of US military action against several countries, to the signal of no retreat on the Greenland issue. Furthermore, the stalled Russia-Ukraine peace process, tensions with Iran, and the Gaza issue, create a persistent layer of risk.
From economic data, the ISM for the US services sector rose to 54.4 in December, but the labor market showed less solid signals. The ADP showed a 41,000 increase in private sector jobs (below expectations), while the JOLTS report showed a decline in job openings to 7.146 million. This combination maintains the narrative that the labor market is starting to cool.
Even so, most market participants tend to maintain aggressive positions as the primary focus is on Friday's Nonfarm Payrolls (NFP). This data is considered to determine expectations for the Fed's future interest rate path, simultaneously driving the dollar and providing new direction for gold.
Previously, US weekly claims for a decline on Thursday could trigger short-term volatility. However, with fundamentals still supportive, the market believes it is safer to wait for confirmation from the NFP before deciding whether gold selling pressure will continue or reverse upwards.
Key Points:
- Gold is under pressure for the second day, but the decline is considered limited.
- Selling is dominated by profit-taking ahead of major US data.
- Geopolitical risks are rising → supporting demand for safe havens like gold.
- Fed expectations remain dovish → the dollar is unlikely to strengthen further, supporting gold.
- Market focus is on Friday's NFP as a determinant of interest rate direction and gold's next movement. (asd)
Source: Newsmaker.id
