Safe-haven appeal fails? Gold prices fall unusually amid geopolitical crisis, unable to withstand profit-taking before non-farm payrolls data release.
2026-01-08 15:33:06
Spot gold continued its decline in European trading on Thursday (January 8), falling for the second consecutive day, with a daily drop of about 0.5%, currently trading around $4,435 per ounce. In the absence of major fundamental catalysts, this decline can be attributed to some investors taking profits ahead of Friday's US non-farm payroll report. This key data will provide the market with more clues about the Federal Reserve's interest rate cut path, thereby affecting demand for the dollar and providing a meaningful boost to gold, a non-interest-bearing asset.
Meanwhile, the market is increasingly accepting the expectation that the Federal Reserve will cut interest rates twice more this year, which is putting some pressure on the dollar, which traded in a narrow range around 98.70 during Thursday's European session. Furthermore, a slight deterioration in resilient global risk sentiment, coupled with escalating geopolitical tensions, may provide some support for safe-haven asset gold.
Despite fundamental support, the initial market reaction to the shock of the US military's arrest of Venezuelan President Nicolás Maduro over the weekend appears to have subsided, prompting gold prices to see profit-taking for the second consecutive day on Thursday. However, a combination of factors may curb aggressive short positions in gold and help limit the downside.
US President Donald Trump has threatened military action against Colombia and Mexico as an extension of the campaign to combat criminal networks and destabilize the region. Furthermore, Secretary of State Marco Rubio has hinted that the US will not back down from its goal of taking over Greenland, and Trump has reserved the option of achieving this through military means.
Furthermore, the lack of progress on the Russia-Ukraine peace agreement, the turmoil in Iran, and the ongoing geopolitical risks surrounding Gaza could provide support for precious metals as a safe-haven asset. This, coupled with market expectations that the Federal Reserve will cut interest rates in March and again later this year, could help limit the decline in gold prices.
On the economic data front, the Institute for Supply Management (ISM) reported an unexpected rebound in service sector activity in December, with its non-manufacturing purchasing managers' index rising to 54.4 from 52.6 in November. However, this optimistic data was largely offset by two lackluster U.S. labor market reports.
According to data from the Automatic Data Processing (ADP) Institute, U.S. private sector employment increased by 41,000 in December, compared with a decrease of 29,000 in November (revised from -32,000), while the market expected an increase of 47,000. Additionally, the Job Openings and Labor Turnover Survey showed that job openings fell to 7.146 million in November.
However, the market seems reluctant to make aggressive directional bets, as the focus remains firmly on Friday's US non-farm payrolls report. This crucial employment data will influence market expectations regarding the Federal Reserve's policy path, thereby driving demand for the dollar and providing new momentum for non-interest-bearing gold.
Meanwhile, the U.S. weekly initial jobless claims data to be released later on Thursday may provide short-term directional guidance for gold.
From a technical perspective, the confluence of the 100-hour simple moving average (SMA, 4429.50) and the 38.2% Fibonacci retracement level of the recent upward wave at 4428 may provide some support for gold prices. A decisive break below this level could trigger a technical sell-off, dragging gold prices down to the $4400 mark.
Meanwhile, the moving average divergence indicator is below the signal line and below the zero axis, and the histogram is expanding negatively, indicating that bearish momentum is strengthening. Furthermore, the Relative Strength Index (RSI) near 40 is bearish and continues to decline, reinforcing the short-term bearish bias.
On the upside, any immediate rebound attempt will first face resistance at the 23.6% Fibonacci retracement level (4455). Failure to break through this resistance will limit any rebound. Conversely, a sustained hold above the 23.6% Fibonacci retracement level would suggest a stabilizing market sentiment.
(Spot gold hourly chart, source: EasyForex)
At 15:25 Beijing time, spot gold was trading at $4432.88 per ounce.
Meanwhile, the market is increasingly accepting the expectation that the Federal Reserve will cut interest rates twice more this year, which is putting some pressure on the dollar, which traded in a narrow range around 98.70 during Thursday's European session. Furthermore, a slight deterioration in resilient global risk sentiment, coupled with escalating geopolitical tensions, may provide some support for safe-haven asset gold.
Gold bulls reacted mildly to dovish expectations from the Federal Reserve and geopolitical risks.
Despite fundamental support, the initial market reaction to the shock of the US military's arrest of Venezuelan President Nicolás Maduro over the weekend appears to have subsided, prompting gold prices to see profit-taking for the second consecutive day on Thursday. However, a combination of factors may curb aggressive short positions in gold and help limit the downside.
US President Donald Trump has threatened military action against Colombia and Mexico as an extension of the campaign to combat criminal networks and destabilize the region. Furthermore, Secretary of State Marco Rubio has hinted that the US will not back down from its goal of taking over Greenland, and Trump has reserved the option of achieving this through military means.
Furthermore, the lack of progress on the Russia-Ukraine peace agreement, the turmoil in Iran, and the ongoing geopolitical risks surrounding Gaza could provide support for precious metals as a safe-haven asset. This, coupled with market expectations that the Federal Reserve will cut interest rates in March and again later this year, could help limit the decline in gold prices.
On the economic data front, the Institute for Supply Management (ISM) reported an unexpected rebound in service sector activity in December, with its non-manufacturing purchasing managers' index rising to 54.4 from 52.6 in November. However, this optimistic data was largely offset by two lackluster U.S. labor market reports.
According to data from the Automatic Data Processing (ADP) Institute, U.S. private sector employment increased by 41,000 in December, compared with a decrease of 29,000 in November (revised from -32,000), while the market expected an increase of 47,000. Additionally, the Job Openings and Labor Turnover Survey showed that job openings fell to 7.146 million in November.
However, the market seems reluctant to make aggressive directional bets, as the focus remains firmly on Friday's US non-farm payrolls report. This crucial employment data will influence market expectations regarding the Federal Reserve's policy path, thereby driving demand for the dollar and providing new momentum for non-interest-bearing gold.
Meanwhile, the U.S. weekly initial jobless claims data to be released later on Thursday may provide short-term directional guidance for gold.
Gold appeared vulnerable after breaking below the key support zone of $4430-$4425 during the day and may test lower levels further.
From a technical perspective, the confluence of the 100-hour simple moving average (SMA, 4429.50) and the 38.2% Fibonacci retracement level of the recent upward wave at 4428 may provide some support for gold prices. A decisive break below this level could trigger a technical sell-off, dragging gold prices down to the $4400 mark.
Meanwhile, the moving average divergence indicator is below the signal line and below the zero axis, and the histogram is expanding negatively, indicating that bearish momentum is strengthening. Furthermore, the Relative Strength Index (RSI) near 40 is bearish and continues to decline, reinforcing the short-term bearish bias.
On the upside, any immediate rebound attempt will first face resistance at the 23.6% Fibonacci retracement level (4455). Failure to break through this resistance will limit any rebound. Conversely, a sustained hold above the 23.6% Fibonacci retracement level would suggest a stabilizing market sentiment.
(Spot gold hourly chart, source: EasyForex)
At 15:25 Beijing time, spot gold was trading at $4432.88 per ounce.
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