Gold surges past $4,500, poised for a 4% weekly increase after US NFP

Gold Prices Climb, Set for Strong Weekly Performance

On Friday, gold prices advanced, positioning the metal for a weekly gain of nearly 4%. This movement followed a mixed employment report from the United States, where job creation fell short of expectations. Despite a slight drop in the unemployment rate, market participants continue to anticipate that the Federal Reserve will reduce interest rates later this year. At the latest update, XAU/USD was trading at $4,507, marking a 0.65% increase.

Gold Surges as Soft Jobs Data Fuels Rate Cut Hopes

Recent US economic indicators have reinforced expectations for lower interest rates in the near term. Throughout the year, traders remain optimistic that the Federal Reserve will implement a total of 50 basis points in rate reductions.

Examining the details, December’s Nonfarm Payrolls numbers came in below both forecasts and the previous month’s figures. However, the unemployment rate declined, and average hourly earnings matched predictions.

Housing sector reports indicated a continued slowdown, with both Building Permits and Housing Starts for October falling compared to November. On a brighter note, the University of Michigan’s preliminary Consumer Sentiment reading for January surpassed estimates, though concerns about inflation among US households persist for the medium term.

Following these releases, gold briefly dipped toward $4,450 before rebounding past $4,500 and reaching an intraday peak of $4,517—just shy of the all-time high at $4,549. Meanwhile, the US Dollar Index (DXY) initially lost ground but later regained momentum.

The DXY, which tracks the dollar against six major currencies, rose by 0.33% to 99.16.

Looking ahead, gold investors are focused on next week’s US economic updates, including inflation data, retail sales, regional manufacturing surveys, jobless claims, and remarks from Federal Reserve officials.

Market Highlights: Gold Rallies as Treasury Yields Hold Steady

• Gold prices surged while US Treasury yields remained largely unchanged, with the 10-year note yielding 4.171%.
• According to the US Bureau of Labor Statistics, 50,000 jobs were added in December—below the projected 60,000 and down from the revised 56,000 in November. Despite the slower hiring pace, the unemployment rate dropped to 4.4% from 4.6%, beating expectations and easing concerns about labor market weakness.
• Housing data showed Building Permits slipped by 0.2% in October, decreasing from 1.415 million to 1.412 million. Housing Starts also declined, with privately owned starts falling 4.6% month-over-month to 1.246 million, compared to 1.306 million in September.
• The University of Michigan’s preliminary Consumer Sentiment index for January rose to 54, up from November’s final reading of 52.9 and above the forecast of 53.5. One-year inflation expectations held steady at 4.2%, while five-year expectations increased to 3.4% from 3.2%.
• After the latest US data, the Atlanta Fed’s GDP Now estimate for Q4 2025 stands at 5.1%, a decrease of 0.3% from the previous day.
• Based on data, investors are currently factoring in 56 basis points of Federal Reserve rate cuts for 2026.

Fed interest rate probabilities - Source: Prime Market Terminal

Technical Outlook: Gold Breaks Above $4,500, Eyes Record Levels

The upward momentum in gold continues, with buyers aiming to close the week above the $4,500 threshold. The Relative Strength Index (RSI) is nearing a new cycle high, signaling growing bullish momentum and the potential for further price increases. Should XAU/USD surpass the record high of $4,549, the next target could be $4,600.

On the other hand, if XAU/USD ends the session below $4,500, sellers may push the price down toward the daily low of $4,450, with $4,400 as the next area of interest.

Gold daily chart