Gold stabilizes below 4,455 USD amid rising yields and a strengthening dollar

Pressure on Yellow Metal - US Yields and Dollar Strength Limit Upside Potential

Gold prices remain stuck near 4,455 USD in Thursday’s session, after a brief sell-off that pushed the metal down to 4,407 USD. The strengthening US dollar and rising US Treasury yields pose the main obstacles to potential gains in XAU/USD. This was echoed by an optimistic outlook on the US labor market ahead of the December Nonfarm Payrolls report.

Dollar Rebounds on Positive Employment Data

The US dollar resumes its rally, driven by positive signals from the labor market. The number of layoffs in November halved compared to previous months, while unemployment benefit claims were lower than expected. The US trade deficit also significantly narrowed, supporting the rise of the dollar index (DXY) by 0.20% to 98.92, breaking above the 200-day moving average at 98.87.

However, to confirm the sustainability of this rebound, bulls will be looking for a close above this psychological support level.

Market Prices in Fed Rate Cuts, but Consumer Data Raises Concerns

Money markets are currently pricing in a 56 basis point reduction in interest rates by the Federal Reserve in 2026. Meanwhile, the latest consumer survey from the New York Fed indicates a deterioration in both inflation expectations and optimism about employment prospects.

Inflation expectations over 12 months rose to 3.4% from 3.2%, while medium-term projections (3-5 years) remained steady at 3%. Consumers, however, show increased concerns about potential layoffs and difficulty finding work.

Labor Market Data Does Not Support Bears on Gold

In the week ending January 3, 208,000 new unemployment claims were filed, better than the forecast of 210,000, but higher than the previous week. The Challenger Job Cuts report showed 35,553 layoffs in December — nearly half the November figure.

Andy Challenger of Challenger, Gray & Christmas commented: “The year ended with the lowest number of announced layoffs since 2023. Although December is traditionally a quiet month, the increase in hiring plans is a positive sign after a year marked by significant reductions."

Additionally, the US trade deficit in goods and services plummeted from $48.1 billion to $29.4 billion in October, surpassing expectations. The decline was mainly supported by a drop in pharmaceutical imports.

Treasury Yields Rise, Weighing on Gold

The rise in US Treasury yields has been one of the main brakes on gold prices. The yield on 10-year notes increased by nearly 2.5 basis points to 4.173%, while real yields (usually inversely correlated with gold) rose by 2 basis points to 1.903%.

The Atlanta Fed’s GDP growth estimate for Q4 2025 was also revised upward — from 2.7% to 5.4% — indicating solid economic momentum.

What Investors Are Waiting For — Nonfarm Payrolls Report on Friday

Friday’s employment report will be a key moment for markets. Consensus forecasts call for a 60,000 increase in employment in December (below November’s 64,000), with the unemployment rate falling from 4.6% to 4.5%.

Technical Outlook: Bulls Control the Trend, but Momentum Weakens

The upward trend in gold remains intact, but a daily close below Wednesday’s low at 4,423 USD could trigger a test of the 4,400 USD level. The RSI indicator shows flat momentum, though it remains above the neutral line.

To resume gains, XAU/USD needs to break above 4,500 USD. A move in that direction could open the way to a record at 4,549 USD and the next target at 4,600 USD.

On the downside, a drop below 4,400 USD will look for support at the 20-day moving average (4,376 USD). Breaking this level could expose 4,300 USD, and if gold falls below the last cycle low at 4,274 USD, the broad bullish trend could be at risk.