Easing geopolitical tensions and a rebounding dollar put pressure on gold prices, but dovish expectations from the Federal Reserve supported gold's resilience.
2026-02-05 15:09:41
On Thursday (February 5), spot gold traded lower during the Asian and European sessions, currently hovering around $4,925 per ounce, down about 0.7% on the day. The US dollar index touched a two-week high (97.82) and attempted to extend its rebound from a four-year low, putting downward pressure on dollar-denominated gold. Geopolitically, Iran and the United States agreed to hold talks in Oman on Friday, easing market concerns about a broader military conflict and weakening gold's safe-haven appeal.
However, Wednesday's weaker-than-expected US ADP employment data, indicating a weak labor market, strengthened the case for a Federal Reserve rate cut, potentially curbing aggressive bets by dollar bulls and providing some support for non-interest-bearing gold. In this context, gold bears need to remain vigilant.
US President Trump's nomination of Kevin Warsh as Federal Reserve Chairman sparked market speculation that the Fed's monetary policy might be more hawkish than expected, which propelled the dollar to continue its recent rebound. However, Trump later stated that he would not have nominated Warsh as Fed Chairman if he had expressed a willingness to raise interest rates, and emphasized that a Fed rate cut was "almost a foregone conclusion."
Market traders are still betting on two more rate cuts by the Federal Reserve in 2026. Wednesday's weaker-than-expected U.S. private sector jobs data further reinforced this expectation. The Institute for Automatic Data Processing (ADP) reported that private sector jobs increased by 22,000 in January, below the revised figure of 37,000 in the previous month and market expectations of 48,000.
On the other hand, the US ISM non-manufacturing PMI remained at 53.8 in January, indicating continued strong expansion in the service sector, which provided mild support for the US dollar and put pressure on gold.
Geopolitically, the US-Iran negotiations remain divided—the US demands that Iran's missile program be included in the negotiations, while Iran insists on discussing only its nuclear program. This stalemate may limit the downside potential of safe-haven gold.
In their latest report, UBS analysts pointed out that gold remains a powerful tool for hedging risks, believing that the bull market is not over yet, and predicting that the price of gold may rise to $6,200 per ounce by mid-2026, an increase of nearly 25% from the current level.
Market focus has shifted to US economic data to be released on Thursday, including the delayed JOLTS job openings data and weekly initial jobless claims. These data, along with speeches by Federal Reserve officials, may jointly influence the dollar and gold prices.
Gold prices retreated overnight near the $5,100 mark, subsequently falling sharply, reinforcing expectations that gold may depreciate further in the short term.
From a technical perspective, the MACD line is above the signal line and above the zero axis, but its positive histogram is gradually contracting, suggesting that upward momentum is weakening. The Relative Strength Index (RSI) is currently slightly below the midline, indicating a short-term bearish bias.
However, the 200-period moving average (MA, 4665.57) is steadily rising, and gold prices are currently still above this moving average, indicating that the overall upward trend structure remains intact. Based on the recent high and low range, the 50% Fibonacci retracement level of $4993.66 forms initial resistance. A break above this level could lead to a further challenge of the 61.8% retracement level at $5134.16. A closing price that holds above this resistance level would significantly strengthen the bullish signal and open up room for a subsequent rebound.
Short-term price action signals are conflicting: the MACD's bullish momentum is weakening, while the RSI remains below 50, indicating insufficient bullish momentum for gold below current resistance levels. If the price fails to break through the 50% Fibonacci retracement level of $4993.66, the bearish outlook may continue; however, the gradually rising 200-period moving average (4665.57) is expected to provide effective support during this downtrend.
(Spot gold 4-hour chart, source: FX678)
At 15:08 Beijing time, spot gold is currently trading at $4924.45 per ounce.
However, Wednesday's weaker-than-expected US ADP employment data, indicating a weak labor market, strengthened the case for a Federal Reserve rate cut, potentially curbing aggressive bets by dollar bulls and providing some support for non-interest-bearing gold. In this context, gold bears need to remain vigilant.
The Fed's dovish expectations offset the dollar's strength, leaving gold bearish momentum insufficient.
US President Trump's nomination of Kevin Warsh as Federal Reserve Chairman sparked market speculation that the Fed's monetary policy might be more hawkish than expected, which propelled the dollar to continue its recent rebound. However, Trump later stated that he would not have nominated Warsh as Fed Chairman if he had expressed a willingness to raise interest rates, and emphasized that a Fed rate cut was "almost a foregone conclusion."
Market traders are still betting on two more rate cuts by the Federal Reserve in 2026. Wednesday's weaker-than-expected U.S. private sector jobs data further reinforced this expectation. The Institute for Automatic Data Processing (ADP) reported that private sector jobs increased by 22,000 in January, below the revised figure of 37,000 in the previous month and market expectations of 48,000.
On the other hand, the US ISM non-manufacturing PMI remained at 53.8 in January, indicating continued strong expansion in the service sector, which provided mild support for the US dollar and put pressure on gold.
Geopolitically, the US-Iran negotiations remain divided—the US demands that Iran's missile program be included in the negotiations, while Iran insists on discussing only its nuclear program. This stalemate may limit the downside potential of safe-haven gold.
In their latest report, UBS analysts pointed out that gold remains a powerful tool for hedging risks, believing that the bull market is not over yet, and predicting that the price of gold may rise to $6,200 per ounce by mid-2026, an increase of nearly 25% from the current level.
Market focus has shifted to US economic data to be released on Thursday, including the delayed JOLTS job openings data and weekly initial jobless claims. These data, along with speeches by Federal Reserve officials, may jointly influence the dollar and gold prices.
Gold prices need to hold above $5,000 to shift the short-term trend in favor of the bulls.
Gold prices retreated overnight near the $5,100 mark, subsequently falling sharply, reinforcing expectations that gold may depreciate further in the short term.
From a technical perspective, the MACD line is above the signal line and above the zero axis, but its positive histogram is gradually contracting, suggesting that upward momentum is weakening. The Relative Strength Index (RSI) is currently slightly below the midline, indicating a short-term bearish bias.
However, the 200-period moving average (MA, 4665.57) is steadily rising, and gold prices are currently still above this moving average, indicating that the overall upward trend structure remains intact. Based on the recent high and low range, the 50% Fibonacci retracement level of $4993.66 forms initial resistance. A break above this level could lead to a further challenge of the 61.8% retracement level at $5134.16. A closing price that holds above this resistance level would significantly strengthen the bullish signal and open up room for a subsequent rebound.
Short-term price action signals are conflicting: the MACD's bullish momentum is weakening, while the RSI remains below 50, indicating insufficient bullish momentum for gold below current resistance levels. If the price fails to break through the 50% Fibonacci retracement level of $4993.66, the bearish outlook may continue; however, the gradually rising 200-period moving average (4665.57) is expected to provide effective support during this downtrend.
(Spot gold 4-hour chart, source: FX678)
At 15:08 Beijing time, spot gold is currently trading at $4924.45 per ounce.
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