Key Points
- Gold dropped to $5,035.75 after touching a one-week high of $5,098.20.
- Markets still expect two rate cuts this year; China extends gold purchases for 15th month.
Gold prices edged lower to $5,035.75 per ounce on Tuesday, pulling back by 0.49% after hitting a one-week high the session before.
The retreat reflects cautious profit-taking by traders ahead of a packed US data calendar, including the latest nonfarm payrolls and inflation readings.
Despite the dip, the broader backdrop remains bullish. Markets continue to price in at least two 25-basis-point Fed cuts in 2026, with the first expected around mid-year.
Lower interest rates tend to support non-yielding assets like gold, as they reduce the opportunity cost of holding bullion.
Demand Picture Remains Resilient
On the physical side, central bank demand remains a key driver. The People’s Bank of China extended its buying streak for a fifteenth consecutive month in January, underlining the metal’s strategic role in diversifying reserve assets.
This comes amid a broader trend of de-dollarisation and increased bullion accumulation by emerging market central banks.
Safe-haven interest also remains in play. While diplomatic channels have opened between Washington and Tehran, tensions continue to simmer. The US has issued fresh warnings to its flagged vessels, advising caution around Iranian waters.
With conflict hotspots across the Middle East and Eastern Europe still unresolved, geopolitical risk continues to lend support to gold’s floor.
Technical Analysis
Gold (XAUUSD) is trading at $5,035.75, down 24.56 points (-0.49%) on the day. After recently hitting a peak of $5,598.60, prices have pulled back sharply but appear to be stabilising above the key support region around the $4,960–$5,000 band.
The short-term correction found footing after a long lower wick on the massive red candle (around 5 Feb), suggesting strong buyer defence around those lows.
Price is now oscillating between the MA5 ($4,960.78) and MA10 ($5,008.96), while hovering just under the MA20 ($4,915.21) and above the MA30 ($4,762.15).
The moving averages are beginning to converge, indicating a potential consolidation phase. Volume has cooled slightly, but remains elevated compared to earlier in the trend, reflecting continued trader interest.
As long as gold holds above $5,000, bullish momentum could resume—though a clean break above $5,100–$5,150 is needed to challenge the highs again. Failure to defend the $4,950 area may open the door toward $4,800 or lower.
Market Implications
In the short term, gold may trade within a narrow consolidation band as traders await clarity from the upcoming US payrolls and CPI data.
If inflation shows signs of cooling and job growth weakens, this could reinforce dovish Fed expectations and reignite upside in bullion.
On the other hand, any upside surprise in core CPI may temporarily weigh on gold, especially if bond yields tick higher in response.
While a retest of $5,600 may take time, any dip toward $4,900–$4,950 could attract fresh buying from long-term holders and institutional funds.
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