Yellow metal holds its ground: between rising yields and a strengthening dollar

Technical Gold Balance Amid Economic Uncertainty

Against the backdrop of recent economic reports from the US, the XAU/USD pair shows cautious behavior, trading around $4 455. The upward trend remains intact, but technical indicators point to a significant weakening of the bullish momentum. The Relative Strength Index (RSI) stays in the neutral zone, indicating no clear directional movement.

Critical technical levels determine the future dynamics. If the price consolidates above $4 500, a move towards the historical high of $4 549 and then to the psychological level of $4 600 is possible. Conversely, a break below $4 400 could trigger a pullback to the 20-day moving average ($4 376), and further decline below the recent low of $4 274 would cast doubt on the overall bullish trend.

US Labor Market Confirms Stability

Recent economic indicators from the US paint a picture of a strengthening employment market. Initial jobless claims for the week ending January 3rd totaled 208,000 — below the forecast of 210,000 — though higher than the previous week’s (200 000). The December Challenger report recorded 35,553 announced layoffs, roughly half the November level.

Andi Challenger, Chief Revenue Officer at Challenger, Gray & Christmas, shared an optimistic outlook: “The year ended with the lowest number of announced layoffs in the past twelve months. December is traditionally a quiet period, but increased hiring plans indicate positive signals after a year marked by large-scale layoffs.”

The labor market receives additional support from a narrowing trade deficit. The US deficit in goods and services sharply decreased from $48.1 billion to $29.4 billion in October, surpassing market expectations. The main factor behind the decline was a drop in imports, especially in the pharmaceutical sector.

Dollar Strengthens, Gold Faces Pressure

The strengthening of the US dollar becomes a key driver of pressure on gold. The US Dollar Index (DXY), reflecting the ruble’s exchange rate dynamics against six major currencies, rose 0.20% to 98.92, crossing the 200-day simple moving average at 98.87. Experts note that closing the day above this level will be a necessary condition to confirm a sustainable recovery of the currency.

Meanwhile, Treasury yields are rising, further limiting gold’s attractiveness. The yield on 10-year bonds increased by nearly 2.5 basis points to 4.173%, and real yields rose by 2 basis points to 1.903%. When yields increase, safe-haven assets become more competitive for investors.

Consumer Sentiment and Inflation Expectations

A survey of consumer expectations by the Federal Reserve Bank of New York revealed mixed trends. Short-term inflation expectations rose to 3.4% from 3.2%, while medium- and long-term forecasts remained stable at 3%. However, consumers are less optimistic about the labor market outlook, experiencing increased concern about potential job losses.

Despite growing worries, the Federal Reserve Bank of Atlanta’s report showed that the GDP Now estimate for Q4 2025 increased from 2.7% to 5.4%, reflecting an improvement in economic prospects. Financial markets are pricing in the possibility of a 56 basis point cut in Fed rates during 2026.

Upcoming Key Employment Data

On Friday, investors await the release of the December non-farm payrolls report. Consensus expects an increase of 60,000 jobs, slightly below November’s 64,000. The unemployment rate, according to analysts’ forecasts, should decrease from 4.6% to 4.5%.

These data will be a decisive factor for the future movement of both gold and the dollar. If the figures exceed expectations, pressure on the yellow metal could intensify, while weaker numbers might lead to a reassessment of market prospects.

Conclusion: Gold in a Waiting Mode

Currently, gold is at a balance point between an upward trend and short-term pressure from a strengthening dollar and rising yields. XAU/USD consolidates around $4 455, awaiting additional signals from the US labor market. A key condition for resuming growth is breaking through the $4 500 level, which could open the way to historic highs.