Gold faces a strong selling wave.. Will the XAU/USD pair succeed in staying above $4425?

Traders Withdraw Before Critical US Employment Data

The XAU/USD (Gold/Dollar) pair has been under continuous selling pressure since the start of the week, with the price slipping close to its lowest levels during Thursday’s Asian session. This retreat is partly due to profit-taking by traders who prefer to wait before the release of the highly anticipated US Non-Farm Payrolls (NFP) report on Friday, a key economic indicator that could reshape market expectations regarding Federal Reserve decisions.

The current caution in the market does not stem from weak fundamentals but from uncertainty about the upcoming US monetary policy path. Traders recognize that the employment data released on Friday will serve as a pivotal point, determining whether the Federal Reserve will cut interest rates twice this year as currently expected or revise those expectations.

Strong Support Levels Prevent Sharp Declines

Despite the current selling pressure, there are decisive factors supporting gold prices and preventing further steep declines. First, escalating geopolitical tensions, especially instability in Ukraine and Russia, complex issues surrounding Gaza, along with recent developments in the Caribbean region over Venezuela, all boost demand for safe-haven assets like gold.

Second, pessimistic outlooks regarding the Federal Reserve’s trajectory are weighing on the US dollar (USD), making gold more attractive to buyers worldwide. The dollar, which has gained modestly over the past two days, still faces headwinds from expectations of interest rate cuts.

Third, the mixed US economic data released on Wednesday did not provide clear support for the dollar. While the Services PMI unexpectedly rose to 54.4 from 52.6 in November, labor market data was less encouraging: private sector employment increased by only 41,000 jobs (less than the expected 47,000), and available job openings fell to 7.146 million.

Geopolitical Scenario Tightens the Noose

Notably, US President Donald Trump made sharp remarks against several South American countries, threatening military intervention against criminal networks in Colombia and Mexico. Secretary of State Marco Rubio also confirmed that the US administration’s goals remain unchanged, deepening the sense of global instability. These geopolitical factors serve as a long-term support for gold as a safe-haven asset.

Technical Analysis: Critical Levels to Watch

On the technical side, the $4425 level is of utmost importance for the XAU/USD pair. This level is formed by the 100-hour simple moving average and the 38.2% Fibonacci retracement of the recent upward move. A decisive break below this barrier could open the way for further declines toward $4400.

Technical indicators suggest weakening bullish momentum: the MACD has slipped below the signal line and zero, with expanding negative histogram, while the RSI stands at 40, a neutral to bearish zone leaning toward further decline.

Conversely, recovery attempts may face resistance around the 23.6% Fibonacci level near $4450. Failure to regain above this level will keep rebounds limited, but sustained support above the 38.2% retracement could halt the downtrend and stabilize the price tone.

Summary and Trader Advice

The current situation of the XAU/USD pair reflects uncertainty ahead of the crucial employment report on Friday. While gold faces selling pressure, strong fundamentals and geopolitical tensions prevent a sharp collapse. Prudence suggests waiting for truly strong unemployment data before taking aggressive short positions. Key levels to watch: $4425 (Vital Support), $4450 (Technical Resistance), and $4400 (Potential Downside Target upon decisive break).