Gold halts winning streak, ending last week’s rally

• Gold price halts winning streak on Monday as markets catch up on the Nonfarm Payrolls release. 
• Traders and investors remain cautious and favor safe-haven assets such as Gold and the US Dollar. 
• Gold to test support before continuing its rally again. 

Gold’s price (XAU/USD) takes a step back and halts its four-day winning streak on Monday as markets catch up and reprice the recent US Nonfarm Payrolls release. The report further confirms the narrative that the Federal Reserve (Fed) might keep its policy rate higher for longer. While higher borrowing costs are typically negative for the non-interest-bearing precious metal, investors are bracing for more volatility ahead of President-elect Donald Trump’s return to the White House on January 20. 

On the economic data front, there is a relatively calm trading day ahead, with the dust settling further after the recent US Nonfarm Payrolls release. This Monday, the US Treasury will allocate some short-term bonds to the market. 

Daily digest market movers: Time to settle 

• Operations at Wilton Resources’ Ciemas Gold Project in Indonesia remained suspended due to the continued power outage amid heavy rainfall caused by the La Nina phenomenon, according to a Friday press release, Bloomberg reports. 
•  The Indonesian unit, Masmindo Dwi Area, picked Macmahon as the mining services contractor for the Awak Mas gold project in South Sulawesi, according to an exchange filing, Bloomberg reports. The contract is valued at A$463 million over seven years and is expected to start in mid-2025.
• At 16:30 GMT, three-month and six-month bills are due to be auctioned by the US Treasury. 
• The US 10-year benchmark rate trades at 4.782% at the time of writing on Monday, a touch lower than the peak at opening in Asia near 4.796%.
• At 21:30 GMT,  the Commodity Futures Trading Commission (CFTC) will release the Gold NC Net Positions. A forecast is not available, but the previous positioning was at $247,300. The report provides information on the size and direction of the positions taken across all maturities, participants primarily based in Chicago and New York futures markets. Forex traders focus on "non-commercial" or speculative positions to determine whether a trend remains healthy or not, as well as market sentiment towards a certain asset.

Technical Analysis: Critical moment

Gold has broken through a strong pennant formation, which was mentioned several times last week. Despite all the headwinds from higher yields and a stronger US Dollar (USD), the Bullion was able to still power through. Now support nearby needs to hold to avoid the Gold price from falling back into the pennant and resulting in a false break with the risk of more downside at hand. 

On the downside, the descending trend line near $$2,678 should hold as support to avoid re-entry in the pennant formation. The 55-day Simple Moving Average (SMA) at $2,652 is the next support after it saw a daily close above it on Wednesday. Further down, the 100-day SMA at $2,635 is the next in line.

On the upside, $2,708 is the next pivotal level to look out for. Once that level is cleared, though still quite far off, $2,790 is the key upside level, which would be a fresh all-time high. 

XAU/USD: Daily Chart