Market attention will remain focused on geopolitics and US data. & more related news here

After losing more than 4% in the last week of the year, gold (XAU/USD) gained bullish momentum as trading conditions normalized. Although XAU/USD entered a consolidation phase after the rally seen earlier in the week, managed to record weekly profits. December US inflation data and geopolitics could boost gold action in the short term.

Gold recovers after a bearish end until 2025

Gold recorded heavy losses between the Christmas and New Year holidays. In the absence of fundamental drivers, profit taking apparently triggered this movement, which was intensified by low trading volumes.

As market conditions began to normalize, XAU/USD gained ground and rose over 2.5% on Monday. Besides, rising geopolitical tensions in news of US soldiers enter Venezuela and capture Venezuelan President Nicolás Maduro and his wife over the weekend, allowed gold to benefit from safe haven flows. After extending its rally and gaining another 1% on Tuesday, renewed strength in the US dollar (USD) and CME Group’s decision to increase margins on gold and silver futures caused XAU/USD to lose traction.

Data released by Automatic Data Processing (ADP) on Wednesday showed that U.S. private sector payrolls increased by 41,000 in December following a decline of 29,000 in November. On another positive note, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers’ Index (PMI) improved to 54.4 in December from 52.6 in November. Additionally, the PMI survey employment index rose into expansion territory above 50 for the first time since June. Given that these data reassure the maintenance of the Federal Reserve (Fed) policy in January, Gold dipped mid-week before entering a consolidation phase.

Meanwhile, China announced silver export controls (XAG/USD). With this development, silver prices rose sharply at the start of the week, gaining over 10% in a span of two days.

Reporting on the matter“China ranks second in global silver mine production, but the Chinese dominate the silver market thanks to their enormous refining capacity. The country controls 60 to 70 percent of the world’s supply of refined silver,” said Mike Maharrey, FXStreet contributor and market analyst at Money Metals Exchange. Although the CME’s margin increase caused the Around 57 years old, The gold/silver ratio is currently at its lowest level since August 2013..

On Friday, the US Bureau of Labor Statistics (BLS) reported that nonfarm payrolls increased by 50,000 in December, compared to market expectations of 60,000. On a positive note, the unemployment rate fell to 4.4% from 4.6% in November. The market reaction to the jobs data was short-lived and gold remained in the upper half of its weekly range heading into the weekend.

Gold traders will focus on geopolitics and US inflation data

The economic calendar will be relatively light in terms of data publication. On Tuesday, the BLS will release the Consumer Price Index (CPI) data for December. The November Retail Sales and Producer Price Index will also appear on the US economic agenda, and will likely be largely ignored by market participants.

December inflation data is unlikely to significantly influence the Fed’s January decision, but a significant surprise, especially in the monthly core CPI print. could trigger a market reaction. A reading of 0.3% or more could Rekindle concerns about persistent inflation stickiness. and boost the USD in the immediate term. On the contrary, a reading below 0.2% could have the opposite impact on the currency’s performance and help XAU/USD rise.

Investors will watch closely geopolitical headlines throughout the week. US Secretary of State Marco Rubio plans to meet with officials from Denmark and Greenland. In an interview with the New York Times, the president of the United States Donald Trump reiterated his intentions to seize Greenland. “Ownership is very important,” Trump told the newspaper. “Because that’s what I think is psychologically necessary for success. I think ownership gives you something that you can’t do, you’re talking about a lease or a treaty. Property gives you things and items that you can’t get by just signing a document.”

It is difficult to say what the next development in this matter will be, but An escalation of tensions between the European Union and the United States could cause investors to seek refuge.. In this scenario, gold could gain strength.

He unrest in Iran led by anti-government demonstrations across the country, including the capital Tehran, could also affect risk sentiment in the near future. US President Trump said the US could take military action against Iran if authorities use lethal force against protesters. In response, “The United States and Israel have tried their attack on Iran and this attack and strategy faced extreme failure,” said Iranian Foreign Minister Abbas Araghchi. “If they repeat it, they will face the same results,” he added, noting that they do not want a war but are prepared for it. A deepening conflict in Iran and active US involvement could allow gold to continue benefiting from safe haven flows.

Technical analysis of gold.

The short-term technical outlook suggests that the bullish bias remains intact. The Relative Strength Index (RSI) indicator on the daily chart remains above 60 and XAU/USD is trading well above the 20-day SMA.

On the upside, $4,500 (static level, round level) is lined up as the immediate resistance level ahead of $4,550 (record high) and $4,600 (round level, upper boundary of the ascending regression channel).

In case gold falls below the $4,400-$4,390 region (static level, 20-day SMA), it could reach the next support at $4,360 (lower boundary of the ascending channel). If this level fails and XAU/USD starts using it as resistance, technical sellers could take action and trigger a prolonged decline. In this scenario, the 50-day SMA, currently located at $4,230, could be seen as the next support level.