Gold prices climbed back near $2,865 on Friday, rebounding from a sluggish performance the previous day. The rally gains traction ahead of the U.S. Nonfarm Payrolls (NFP) report, which could influence Federal Reserve policy. A weaker-than-expected jobs report would increase the likelihood of Fed rate cuts, bolstering gold’s appeal as a non-yielding asset.
Central Banks And Trade Tensions Fuel Gold’s Upside
Adding to gold’s strength, China’s central bank, the People’s Bank of China (PBOC), expanded its gold reserves for the third consecutive month, purchasing approximately 0.16 million troy ounces in January. Despite gold trading at record-high levels, China continues to accumulate the precious metal, as reported by Bloomberg.
Meanwhile, geopolitical concerns and trade tensions remain key drivers for gold’s safe-haven demand. U.S. President Donald Trump’s renewed threats to impose additional tariffs on the Eurozone and other nations have heightened market uncertainty. If the tariff war escalates, investors may further flock to gold as a hedge against economic instability.
Gold Market Movers: Central Bank Accumulation And Global Trends
The PBOC’s gold acquisition follows a brief pause last year, after an 18-month buying spree that concluded in mid-2023. Analysts suggest that China’s continued purchases reflect a broader trend among central banks seeking to diversify reserves amid economic volatility.
Further supporting gold’s bullish momentum, Zimbabwe’s gold production surged to 3,134.34 kg in January, compared to 2,375.32 kg a year earlier, according to Fidelity Gold Refinery. The increase was primarily driven by smaller-scale miners, while production from larger mining operations saw a decline, Reuters reported.
Meanwhile, Citigroup analysts maintain an optimistic outlook, predicting gold could reach $3,000 per ounce within three months if geopolitical tensions and economic uncertainty persist.
U.S. Jobs Data Key To Gold’s Next Move
The U.S. Labor Department will release January’s NFP report, with economists expecting job growth of 170,000 compared to 256,000 in December. However, many analysts anticipate an even softer figure. A weaker-than-expected report could reinforce expectations of a Fed rate cut, potentially driving gold prices to new highs.
Technical Analysis: Eyes On All-Time Highs
Gold’s price action remains data-sensitive, with its next moves hinging on the NFP outcome. If employment figures disappoint, gold could break its current all-time high of $2,882, with resistance levels seen at $2,874 and $2,893 before testing the psychological $2,900 mark.
Conversely, stronger-than-expected job data could trigger a short-term pullback, with key support levels at $2,854, followed by $2,835 and $2,815. Should a deeper correction occur, the $2,790 level—previously a significant resistance point on October 31, 2024—could serve as a major support zone.
Gold’s Path Hinges On Economic Data
With macroeconomic uncertainties persisting and central banks reinforcing their gold reserves, the precious metal’s bullish trajectory remains intact. However, immediate price action will depend on how markets react to the NFP report. If employment data disappoints, gold could gain further momentum, potentially setting the stage for new record highs in the coming weeks.
