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Will Gold Prices Rebound? XAU/USD Holds Steady Below $2,040 Amid Fed Speculation

The XRP price Prediction 0precious metal market opened the week with cautious optimism as gold (XAU/USD) maintained its footing above key support levels during Monday's Asian trading session. While Friday's surprisingly strong US employment data initially pressured bullion prices, escalating geopolitical risks appear to be providing underlying support for the safe-haven asset.

Market participants digested the latest Nonfarm Payrolls report showing 353,000 new jobs created in January - significantly exceeding consensus estimates. The unemployment rate held steady at 3.7%, while wage growth accelerated to 4.5% year-over-year. These robust labor market indicators prompted traders to reassess their expectations for Federal Reserve policy easing, with CME FedWatch data now showing just 19% probability of a March rate cut.

The US dollar found renewed strength following the employment report, creating headwinds for dollar-denominated gold. However, analysts note that bullion's traditional role as a hedge against uncertainty continues to attract buyers amid growing Middle East tensions. Over the weekend, US and UK forces conducted extensive strikes against Houthi targets in Yemen, marking an escalation in regional conflicts.

All eyes now turn to Federal Reserve Chair Jerome Powell's scheduled remarks, which could provide critical insights into the central bank's thinking on inflation and interest rates. Additionally, traders will monitor upcoming economic indicators including China's Caixin Services PMI and the US ISM Services PMI for fresh trading catalysts.

Technical analysts observe that gold has established a consolidation pattern between $2,010 and $2,065 in recent sessions. The metal's ability to hold above psychological support at $2,000 despite reduced expectations for near-term Fed rate cuts suggests underlying strength in the market. Some strategists point to continued central bank buying and retail investor interest as factors that could support prices even in a higher-for-longer rate environment.

As the trading week progresses, market participants will weigh competing fundamental factors - with Fed policy expectations and geopolitical risks likely to remain the primary drivers of gold price action. The precious metal's performance this week could set the tone for February trading as investors adjust their portfolios based on evolving macroeconomic conditions.