During Asian trading hours on Thursday, spot gold edged lower, currently trading near $5,055 per ounce with an intraday decline of approximately 0.55%. The better-than-expected U.S. January non-farm payrolls data prompted markets to reassess the Federal Reserve's policy stance for the first half of 2026, anticipating a less dovish approach than previously expected. Consequently, gold prices briefly faced downward pressure, dropping to around $5,020. However, support from ongoing central bank gold purchases, policy uncertainties emanating from the White House, and concerns over U.S. dollar credibility helped the metal close Wednesday's session with a 1.2% gain at $5,083.51 per ounce.
The combination of robust jobs data and hawkish commentary from Fed officials initially pushed gold prices lower overnight, before they stabilized. The delayed release of the January non-farm payrolls report, postponed due to a three-day U.S. government shutdown, significantly exceeded forecasts. Job growth rebounded strongly to 130,000, up from 50,000 in December and surpassing the market consensus of 70,000. The unemployment rate fell from 4.4% to 4.3%, leading investors to adjust their expectations, with the market now pricing in the first Fed rate cut for July.
Simultaneously, Kansas City Fed President Jeffrey Schmid dampened expectations for rate cuts supported by former President Donald Trump, reiterating his hawkish stance by stating that "cutting rates could lead to prolonged high inflation." Schmid emphasized that current policy is not restrictive for the economy and added that monetary policy needs to remain tight as long as inflation persists near 3%.
Overnight, gold prices dipped to a daily low of $5,020.07 before bargain-hunting emerged, allowing the metal to recover its losses and oscillate near $5,050, ultimately closing at $5,083.51.
Rising U.S. Treasury yields bolstered the U.S. dollar, applying pressure on gold. The 10-year Treasury yield climbed nearly 3 basis points, while the U.S. Dollar Index posted modest gains for a second consecutive session, trading narrowly around 96.95 during the Asian session on Thursday.
On the geopolitical front, risks associated with the Russia-Ukraine conflict showed signs of easing, diminishing gold's safe-haven appeal. Ukrainian President Volodymyr Zelenskiy indicated that territorial issues would be central to the next round of talks with the U.S., confirming that Ukraine had accepted an American invitation for negotiations scheduled next week. The focus is expected to include the possibility of establishing a free economic zone in the Donbas region as a buffer. While Zelenskiy stressed that "this is our territory, and it must be governed by us," he acknowledged skepticism from both Ukrainian and Russian sides regarding the U.S. proposal. This has been interpreted as Ukraine potentially showing greater flexibility on territorial concessions under strong U.S. mediation, in exchange for a ceasefire, reconstruction aid, and security guarantees, suggesting a potential substantive shift in the conflict.
Despite short-term pressures, gold prices remain supported at elevated levels by multiple safe-haven factors. Global central banks have continued to increase their gold reserves for several consecutive years, aiming to hedge against potential erosion of the U.S. dollar's dominant role. This "de-dollarization" trend has accelerated further between 2025 and 2026. Doubts about dollar credibility stem from expanding U.S. fiscal deficits, debt ceiling pressures, and debates over Federal Reserve independence. Furthermore, the aggressive tariff policies, trade protectionist measures, and public pressure on the Fed following the Trump administration's return to office have intensified market expectations for a long-term weakening of the dollar. Many institutional investors view gold as a core hedge in "currency depreciation trades," boosting demand and underpinning a solid overall upward trend, even amid occasional profit-taking.
Looking ahead, market participants will focus on the weekly initial jobless claims data for the week ending February 7th, due on Thursday, alongside speeches from several Federal Reserve officials. On Friday, trader attention will shift to the January Consumer Price Index (CPI) report, widely expected to show a slowdown. Both headline and core CPI year-on-year rates are forecast to decelerate to 2.5%, from 2.7% and 2.6% respectively. If the data meets expectations, gold prices could resume their upward trajectory, especially considering previous Fed officials' suggestions that a resumption of disinflation could pave the way for rate cuts.
From a technical perspective, the daily chart for gold shows an intact upward trend. As long as prices hold above the 20-day moving average (MA) at $4,957.36, the market structure remains bullish, with bulls targeting higher levels. The 14-day Relative Strength Index (RSI) is positioned significantly above the midline, indicating a bullish bias. The MACD histogram is consistently narrowing in negative territory, signaling a gradual weakening of bearish momentum. On the upside, a sustained break above the $5,100 level could accelerate gains towards the January 30th high of $5,450.95, with further strength potentially challenging the all-time peak of $5,596.33. Conversely, a break below the 20-day MA could see bears initially target the February 6th low of $4,655.31, followed by a test of the 50-day MA at $4,613.02.
As of 9:37 Beijing time, spot gold was quoted at $5,060.91 per ounce.