**********Thursday, February 6th, in stockgoldAfter rising for five consecutive trading days and reaching a historical high, the price experienced a correction within the day, trading at $2856.17 per ounce, a decrease of 0.40% within the day. This correction is mainly affected by the slight rebound of the US dollar and the improvement of market risk sentiment, but fundamental factors still provide support for gold, limiting its downward space.
Recently, the price of gold has continued to rise due to multiple factors and reached a historic high on Wednesday. However, as the US dollar rebounded from a one week low and market risk sentiment improved, some bulls chose to take profits, causing gold prices to continue their intraday downward trend during Thursday's European session. Nevertheless, market concerns over US President Trump's tariff rhetoric and expectations of a Fed rate cut still provide solid support for gold.
Fundamental analysis
1. Trade situation and risk aversion
Trump's tariff remarks have intensified market concerns about the escalation of the trade situation, driving gold prices to a historic high on Wednesday. Despite the improvement in market risk sentiment on Thursday, investors remain cautious about the potential economic impact of trade conflicts, providing sustained support for safe haven demand for gold.
2. Federal Reserve policy expectations and the trend of the US dollar
The recent uneven performance of US economic data has further strengthened market expectations for the Federal Reserve to cut interest rates. Despite a report from Automatic Data Processing (ADP) showing that private sector employment increased by 183000 in January, better than before, the Purchasing Managers' Index (PMI) for the Service Industry from the Institute for Supply Management (ISM) unexpectedly fell to 52.8, indicating a slowdown in service industry growth. This data caused the yield of US treasury bond bonds to fall to the lowest level since the middle of December last year, dragging down the dollar, thus providing additional support for gold.
Federal Reserve Vice Chairman Philip Jefferson made hawkish remarks on Thursday, stating that he tends to maintain the federal funds rate at its current level and is waiting to observe the effects of Trump's policies. However, this statement failed to boost the US dollar, and the market still generally expects the Federal Reserve to cut interest rates twice this year.
3. Employment data and short-term market focus
Investors are closely monitoring the upcoming US non farm payroll report on Friday for more clues about the economic outlook and interest rate policies. Prior to this, the weekly initial jobless claims data released on Thursday in the United States will also provide short-term guidance for the market. If the employment data shows weakness, it may further strengthen the Federal Reserve's expectation of interest rate cuts, thereby providing upward momentum for gold prices.
technical analysis
From a technical perspective, the relative strength index (RSI) of gold prices has risen above 70, indicating that the market may be overbought, sounding the alarm for bulls. Therefore, before further upward movement, the market may need to undergo a period of consolidation or moderate correction. However, the recent breakthrough of gold prices above key resistance levels indicates that their upward trend still dominates.
In the short term, any pullback may find support near the resistance level of $2855-2850 in the early stages. If it falls below this level, gold prices may further explore the $2810-2800 range. In addition, the level of $2773-2772, which was previously a resistance level, has now transformed into a support level. If it falls below this area, it may trigger technical selling, leading to further decline in gold prices.
Future Trends and Prospects
Overall, the price of gold may face some downward pressure in the short term, but fundamental factors still provide solid support for it. The uncertainty of the trade situation and the expectation of interest rate cuts by the Federal Reserve will continue to provide impetus for the safe haven demand for gold. In addition, the trend of the US dollar and the performance of US economic data will also have a significant impact on gold prices.
From a technical perspective, the upward trend of gold prices has not changed, but the market may need to undergo a period of consolidation to digest recent gains. Investors should closely monitor the upcoming US employment data and the policy movements of the Federal Reserve, which will provide important guidance for the future trend of gold prices.
Overall, gold prices may maintain a volatile trend in the short term, but the medium to long term upward trend remains stable. Market participants need to remain vigilant and respond flexibly to possible fluctuations.
