Gold News: Inflation and Jobs Data Could Decide Gold Market Direction This Week

Gold Bounces Back, Eyes All-Time High Challenge

Last week, Spot Gold followed through to the downside after the steep break the week ending January 30, but buyers quickly ate up that second break and closed the week higher, and in a position to challenge its all-time high at $5602.23. The price action was impressive and revealed to us where investors consider value.

Sure, the market still faces headwinds at a short-term retracement zone at $5037.81 to $5143.89. However, the momentum created by Friday’s surge suggests this could be an easy target zone to overcome if the fundamentals are in sync.

Last week, XAUUSD settled at $4964.62, up $69.18 or +1.41%

Technical Setup: Support Tightening

This week, the wide support zone comes in at $4744.34 to $4427.82, just like last week. However, the uptrend line from the $3886.46 main bottom, moving at a rate of $43.06 per week, comes in at $4532.39. This creates a relatively tight support cluster at $4532.39 to $4427.82. Relatively tight that is, given the current elevated volatility.

Pattern, Price, and Time Still Intact

Markets follow three elements, in my opinion: pattern, price, and time. Gold’s trending pattern of higher tops and higher bottoms has not changed. The closing price reversal top did shift the momentum, but it was only one week down, hardly enough to overbalance the rally. Now if the market continues to move sideways then we’ll have to take another look at time, but as of Friday’s close I don’t see it as an issue yet.

Three Main Fundamental Drivers

Fundamentally, I think there are three main issues and we’re not talking about excessive speculation and CME Group margin hikes. My list of major issues includes the U.S. economy, Fed rate cut odds, and the geopolitical Iran and U.S. situation.

First, let me say that the long-term foundation remains intact so we’re still in “buy the dip” mode for the most part. Our weekly focus is not on trying to catch the quick short, but to find value on the weekly chart.

Central Bank Buying: The Long-Term Foundation

Our long-term foundation is central bank buying. China’s central bank extended its gold buying campaign for a 15th month in January, data from the People’s Bank of China (PBOC) showed on Saturday, Reuters reported. This is good news for the long-term bulls, but keep in mind it’s stale news since it’s already February 9. Nonetheless, I think if you analyze the market closely, you’ll be able to tell if they stop buying or if they decide to sell.

Jobs and Inflation Data This Week

The U.S. economy and Fed rate cut odds can be lumped into one category along with the U.S. Dollar and Treasury yields. This week, gold investors will be eyeing key U.S. jobs and consumer inflation data to assess the state of the economy and to project the timing of the Fed’s first interest rate cut in 2026.

Any softness in the labor market and inflation data should help gold’s effort to rebound from the recent sell-off. The news should keep the Fed on course to cut rates this year, starting in June, but a job market collapse could force the Fed to move sooner.

Iran Talks: Safe-Haven Bid Stays Either Way

The talks between Iran and the United States were described as “good” on Friday and were set to continue this week. I have two takeaways. First, the issues between the two countries are strong enough to warrant risk premium buying so even if a deal or the framework of a deal is reached, I think there is going to be a safe-haven bid. We may see some light selling, but I don’t think it’s going to go away. Second, if the talks collapse, then gold prices could surge.

The Week Ahead: Retracement Zone Holds the Key

Our chart work suggests the tone of the market this week will be determined by trader reaction to the retracement zone at $5002.31 to $5143.89. Neutral inside this range, but strong over $5143.89 and weak under $5002.31.

More Information in our Economic Calendar.