Week Ahead: Gold to retest record highs?

• Gold ↑ 1% YTD, adding to 27% gain in 2024
  

• Less than 5% away from all-time high

• Over past year NFP has triggered moves of ↑ 0.8% & ↓ 0.9%

• Bloomberg FX model: 73% chance of $2611.66 – $2703.68 range next week

• Technical levels: $2620 & $2670

Gold is already up 1% in 2025 after securing its biggest annual gain since 2010.

The precious metal ended last year 27% higher thanks to central bank buying, falling US rates, and geopolitical risk.

Prices touched a three-week high on Friday morning, supported by a softer dollar and cautious market mood.

Nevertheless, the US December nonfarm payrolls report may shape gold’s outlook for January.

Watch out for other key data releases that could spark market volatility:

Monday, 6th January

• CN50: China Caixin services and composite PMI
• EUR: Eurozone HCOB services and composite PMI,
• GER40: Germany CPI, HCOB services and composite PMI
• USDInd: S&P Global PMI’s, Fed Governor Lisa Cook speech

Tuesday, 7th January

• AU200: Australia building approvals
• EU50: Eurozone CPI, unemployment
• TWN: Taiwan CPI
• US500: US job openings, ISM services, Richmond Fed President Thomas Barkin speech

Wednesday, 8th January

• AU200: Australia CPI
• EUR: Eurozone PPI, consumer confidence
• GER40: Germany factory orders
• USDInd: US ADP employment, FOMC minute

Thursday, 9th January

• AU200: Australia retail sales, trade
• CN50: China CPI, PPI
• EUR: Eurozone retail sales
• GER40: Germany industrial production, trade
• RUS2000: Speeches by Philadelphia Fed President Patrick Harker, Richmond Fed President Thomas Barkin and Kansas City Fed President Jeff Schmid

Friday, 10th January

• CAD: Canada unemployment
• JP225: Japan household spending, leading index
• US500: University of Michigan consumer sentiment
• XAUUSD: US nonfarm payrolls

Gold is respecting a bullish channel on the weekly timeframe with prices trading above the 50, 100 and 200 week SMA.

At the current price of $2654, the precious metal is less than 5% away from it’s all-time high at $2790.17.

But do bulls have what it takes to push prices back to records this month?

Here are 3 reasons why gold could see significant prices swings:

  1) US December NFP report – Friday 10th January

The US economy is expected to have created 153,000 new jobs in December 2024. This is much lower than November’s 227,000 headline figure. However, the unemployment is expected to remain unchanged at 4.2%.

Traders are currently pricing in a 54% probability of a 25-basis point cut by March with this jumping to 76% by May.

• Gold prices could appreciate if a weaker-than-expected NFP reports rekindles bets around aggressive US interest rate cuts.

• A stronger-than-expected NFP report may drag gold prices lower, as rate cut bets fade further.

Note: Gold cold see heightened volatility before Friday’s NFP due to the FOMC meeting minutes on Wednesday and speeches by Fed officials throughout the week.

Over the past 12 months, the 6 hours after the US NFP release has seen upwards moves for Gold as much as 0.8% or declines as much as 0.9%.

  2) Geopolitical risk

Russia’s recent drone strike on Kyiv and ongoing tensions in the Middle East could spark risk aversion.

Escalating global tensions may send investors toward safe-haven assets like gold.

  3) Technical forces

Despite the recent jump in prices, gold remains in a range on the daily charts. Support can be found at $2560 and resistance at $2725.

• A solid breakout and daily close above $2670 may open a path toward $2700 and $2725.

• Should prices slip below the 100-day SMA at $2620, this may open the doors toward $2610 and $2600.

Currently, Bloomberg’s FX model points to a 73% chance that Gold will trade within the $2611.66 – $2703.68 range next week.