*) see also: InstaForex Trading Indicators for XAU/USD

This week's investor focus is on the ADP jobs report for the US private sector in January, which is particularly significant given current conditions. Due to the partial shutdown of the US government, the publication of the official Non-Farm Payrolls (NFP) report has been delayed, making ADP data the primary benchmark for assessing the labor market.

The XAU/USD pair continues to trade above the round number of 5000.00, moving within the range of 4980.00 (200 EMA on the 1-hour chart) – 5100.00 (the round number).

After a historical rally and the subsequent sharp correction, gold is showing signs of strength again. The XAU/USD pair has stabilized above the key level of 5000.00 per troy ounce and is preparing for a new stage of growth.

Among the reasons for the correction, the following can be noted:

1. Changes in Fed Expectations: The announcement of the potential appointment of Kevin Warsh—perceived as a monetary "hawk"—as the future Fed chair has strengthened the dollar and expectations for a stricter monetary policy.
2. Technical Overbought Conditions and Position Liquidation: Hitting historical highs prompted widespread profit-taking and the closure of leveraged long positions. Increased margin requirements from CME Group exacerbated the pressure.
3. Strong US Data: Improvements in business activity indices (PMI, ISM) confirmed the resilience of the economy, reducing the urgency of rate-cut expectations. The manufacturing index rose to 52.6 points (the best figure in three years), while the services sector reached 53.5, as forecasts anticipated the ISM PMI for the services sector.

At the same time, despite January's sell-off of more than 10% from the peak above 5590.00, the fundamental drivers for the "yellow metal" have not disappeared, and the interest of major players confirms a long-term bullish outlook: physical demand remains stable (investment flows into physical gold and ETFs have not shown massive outflows; the correction was primarily related to speculative futures positions), trading volumes have not decreased (CME Group data shows that interest in gold contracts remains high, indicating strategic holding of positions by institutional players), and geopolitics has returned to the focus of investors (the incident involving the downed Iranian drone in the Arabian Sea reminded investors of ongoing risks, boosting demand for safe assets).

If we highlight key drivers for potential growth, the following points can be noted:

1. Expectations for Fed Easing: Despite the strong data, the market is still pricing in two rate cuts in 2026. Comments from Fed members (Miran, Barkin) point to the possibility of easing if inflation continues to slow. For gold, which does not yield income, this is a significant positive factor.
2. Geopolitical Uncertainty: Escalation between the US and Iran, prolonged trade conflicts (US-EU, US-Canada), and overall instability support demand for safe-haven assets.
3. Inflation Concerns: The persistence of core inflation above the Fed's target level of 2% keeps gold attractive as a store of value.
4. Dollar Weakness: The dollar, despite local spikes, faces limitations on growth due to expectations of easing monetary policy. The USDX fluctuates around the level of 97.30, showing no clear strength.

Technical Picture

Nearest Support: 4980.00 (200-period moving average on the 1-hour chart) and the psychological level of 5000.00. Holding these levels is critical for bulls.Nearest Resistance: The level of 5100.00. Breaking through this level will open the way for retesting January highs.

Economists' forecasts indicate a year-end target of around 6000.00. The January peak was merely a precursor. Technically, the correction appears complete. The absence of mass capital outflows from gold into bonds (with 10-year Treasury yields stable around 4.300%) confirms that the sell-off was tactical rather than strategic.

Short-Term Risks (for Correction):

1. Strong US Employment Data (ADP, ISM) could strengthen the dollar and delay rate cut expectations.
2. Hawkish Rhetoric from the Fed: Any statements indicating a pause in the easing cycle could exert pressure.
3. Technical Resistance: The level of 5100.00 may present a significant barrier.

Long-Term Drivers (for Growth):

1. Inevitable Easing of Monetary Policy: Even in a prolonged pause, rate cuts are inevitable and will serve as a powerful catalyst.
2. Increasing Geopolitical Risks: Elections, conflicts, and trade wars will support demand for safe-haven assets.
3. Central Bank Purchases: The trend towards diversifying reserves with gold continues.

Scenarios for the Coming Weeks:

1. Base Scenario (Growth with Consolidation): Gold surpasses 5100.00 and moves towards 5300.00 – 5400.00, periodically correcting on strong US data. This is the most likely scenario.
2. Sideways Scenario (Range): Prices trade within a range of 4950.00–5150.00 while awaiting clearer signals from the Fed and inflation data.
3. Breakout Scenario (Accelerated Growth): Escalation in the Middle East, along with weak US data, could trigger a swift move to new highs above 5500.00.

Conclusion

Gold has undergone a necessary and healthy correction after a record rally. The current stabilization above 5000.00 indicates that major players are not rushing to exit the market, as they see long-term value in it. The upward trend remains intact. Short-term volatility will depend on US employment and inflation data, but strategic prospects remain favorable. The combination of an expected shift in the Fed's monetary policy, geopolitical risks, and gold's role as insurance against instability is building a foundation for price growth. Investors should view current levels as an opportunity for strategic accumulation with long-term targets above 5600.00. The immediate task for bulls is to break and hold above 5100.00, which will signal the resumption of substantial growth.