- Gold outlook remains positive amid central bank buying
- Key labour market data coming up in week ahead
- XAU/USD technical analysis: $3,800 in bulls’ radars amid strong momentum
Gold’s latest dip was once again bought, with the reversal happening in mid-week despite the US dollar finding some love on the back of mostly stronger US data. On Friday, the precious metal ended at just shy of $3760, closing in on the next round handle of $3800 level. Now in recent days we have seen paring back in expectations of two more rate cuts from the Fed. But it is worth pointing out that gold was already on a strong multi-year bullish trend before the Fed started cutting rates, and so a bit of paring of those bets was never going to change the gold outlook materially. The PCE data was bang in line with the expectations on Friday and so it didn’t matter too much. The metal has been supported by strong and consistent central bank buying, all owing to concerns about US debt and sticky nature of inflation. Those factors and speculative buying are likely to keep gold supported for a while yet. But if next week’s data causes expectations over a December cut to fall significantly then the dollar should move higher and that could hold back gold. The opposite is also true.
What’s next: busy US data week could define the trend
Looking ahead, we will have some important US labour market data in the week ahead that will set the tone for the near-term gold outlook. JOLTS job openings, ADP private payrolls, ISM surveys, and Friday’s non-farm payrolls will all shape the Fed outlook. With the dollar looking a bit stretched, another round of strong data may be needed to keep the bullish run intact. Otherwise, profit-taking could see the dollar index ease lower in the near term.
Among the week’s employment signals, JOLTS job openings (Tuesday) and non-farm payrolls (Friday) stand out as the most critical.
With attention firmly on signs of a cooling US labour market—while inflation concerns remain—any further weakness could strengthen expectations of two additional Fed rate cuts in 2025. JOLTS, being more forward-looking, will be viewed alongside the other employment releases – including the ADP private payrolls and employment components of the ISM surveys – to assess the broader jobs picture.
As for non-farm payrolls, this one is pivotal. The dollar found renewed strength after the FOMC, following Powell’s remarks that there is no “risk-free path” for rates—leaving markets uncertain about the next steps. From here, much will hinge on incoming data, particularly labour and inflation prints. The Fed will need ongoing softness in jobs, if not in prices, before committing to more cuts. The big question is: will NFP deliver a third straight downside surprise this month?
Gold outlook: Key levels to watch
All told, unless something major changes fundamentally, I think the existing drivers should help the metal cross the $3800 level soon. Short-term support comes in at $3760, followed by $3700.
-- Written by Fawad Razaqzada, Market Analyst
Follow Fawad on Twitter @Trader_F_R
