Gold Price Forecast: XAU/USD holds on to modest gains amid a souring mood

XAU/USD Current price: $2,652.43

• United States services output unexpectedly jumped in December, beating expectations.
• Market players await updates on the US employment situation.
• XAU/USD comfortable at the higher end of its range amid renewed risk aversion.

Spot Gold extended its gains beyond the $2,600 mark early on Tuesday, as investors turned cautious ahead of United States (US) first-tier data. XAU/USD changed course and trimmed most of its intraday gains after the country reported that the ISM Services Purchasing Managers’ Index (PMI) jumped to 54.1 in December from the previous 52.1. Additionally, the number of job openings on the last business day of November stood at 8.09 million, according to the Job Openings and Labor Turnover Survey (JOLTS), beating expectations and improving from the 7.83 million posted in October.

The US Dollar (USD) jumped with the news as stock markets turned south, with Wall Street dipping in the red, as the news spooked further away the odds for a Federal Reserve (Fed) interest rate cut. According to the CME FedWatch Tool, market participants no longer fully price in a Fed rate cut before July.

The same dismal mood prevents Gold from falling harder. The bright metal hovers around $2,650 in the mid-American session amid fresh safety demand.

Market players will now turn their eyes to US employment-related data, as the country will release the December ADP Employment Change report on Wednesday, ahead of Nonfarm Payrolls (NFP) figures on Friday.

XAU/USD short-term technical outlook

The daily chart for the XAU/USD pair shows its neutral-to-bullish. Technical indicators stand directionless at around their midlines, while the bright metal seesaws around a flat 20 Simple Moving Average  (SMA). Meanwhile, the 100 SMA keeps heading north, providing dynamic support at around $2,626.30, while the 200 SMA also retains its upward slope, albeit roughly $200 below the current level.

In the near term, and according to the 4-hour chart, Gold’s rally seems to be losing steam. XAU/USD still holds above all its moving averages, with the 20 SMA aiming to cross above the 200 SMA after already surpassing the 100 SMA. Technical indicators, on the other hand, turned modestly lower, although the Relative Strength Index (RSI) indicator holds at around 58, limiting the bearish potential of the pair.

Support levels: 2,626.30 2,614.45 2,596.00

Resistance levels: 2,649.50 2,665.10 2,678.85