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Source: Reuters

Last week, gold showed resilience amid heightened volatility. Persistent dollar weakness, ongoing central bank purchases, and safe-haven demand driven by geopolitical uncertainty all supported the rally. At the same time, hawkish comments from Fed officials put some pressure on prices at elevated levels.

This week, markets face several key risk events, including the US November nonfarm payrolls and CPI data, as well as rate decisions from the Bank of England and the Bank of Japan. The outcomes of these events could influence interest rate expectations and risk sentiment, significantly shaping gold's trajectory into year-end.

Technical Observation: Bullish Momentum Accelerates, $4,300 Faces a Key Test

On the XAUUSD daily chart, gold's bullish momentum picked up sharply last week, with four consecutive daily gains, shifting the trend from consolidation to an active uptrend. On Thursday, prices broke above the key $4,250 resistance, and on Friday, intraday highs reached $4,353, marking a seven-week peak.

Although there was a rapid pullback of nearly $100 during the US session on Friday, with a long upper shadow highlighting high-level selling pressure, gold ultimately held above $4,300, posting a weekly gain of nearly 2.5%, signaling that bulls remained firmly in control.

Entering Monday, gold continued its upward push, with RSI re-entering the overbought zone above 70, indicating sustained short-term momentum. If the daily candle closes above $4,300, market confidence in the uptrend will strengthen, with prices likely to test the previous high at $4,381.

However, considering the short-term strength, a dip below $4,300 could see support emerge around the $4,180 consolidation low and the uptrend line extending from late October, potentially attracting dip buyers.

Bullish "Base" Intact: Dollar, Central Banks, and Geopolitical Risks in Sync

Gold's ability to hold gains at high levels remains supported by three key factors: the weaker dollar trend, continued central bank purchases, and hedging demand amid geopolitical uncertainty. Together, these elements provide the underlying framework for gold's price support.

On the policy front, December saw a Fed rate cut alongside the resumption of short-term Treasury purchases to ease liquidity pressure, which helped short-term US yields ease. The dollar index fell for the third consecutive week, briefly testing near-term lows around 98.

Dollar weakness lowers the opportunity cost of holding gold and diminishes the relative appeal of higher-yielding assets, redirecting capital flows back into gold.

Meanwhile, central bank buying continues to act as a long-term "anchor" for gold. According to the World Gold Council, global central banks added a net 53 tonnes of gold in October, a significant month-on-month increase and the highest single-month total this year. Consistent official purchases provide a solid base for gold at high levels and support market acceptance of current price ranges.

Geopolitical uncertainty also remains a factor. From US interception of Venezuelan oil shipments, the ongoing Russia-Ukraine stalemate, to tensions in Southeast Asia, these events continually reinforce demand for hedging. While each may have limited immediate impact, collectively they offer marginal support to gold amid broader uncertainty.

Hawkish Fed Voices Emerge, Capping Short-Term Bullish Momentum

Although Fed Chair Powell has clearly signaled that rate hikes are not being considered in the near term, hawkish voices persist within the Fed.

Last Friday, Cleveland Fed President Harker (2026 voting member), Chicago Fed President Goolsby, and Kansas City Fed President George highlighted persistent inflation concerns, favoring a more restrictive stance. These comments pushed down market expectations for 2026 rate cuts, naturally weighing on short-term demand for non-yielding gold.

In my view, this is more of a sentiment recalibration at high levels than the start of a trend reversal. As long as the dollar remains relatively weak, coupled with ongoing central bank purchases and geopolitical hedging demand, the medium-term bullish structure for gold remains intact.

Focus on US Data and Central Bank Decisions, Watch for Volatility

Overall, the bullish structure for gold remains intact, but short-term volatility has increased. With the holiday season approaching, active capital is winding down and market liquidity is thinner. Any deviation from expectations in major risk events is more likely to trigger trend moves rather than just intraday noise. In this environment, risk management is more important than directional calls.

In the US, key focus this week is on November nonfarm payrolls (Thursday AEDT) and CPI (Friday AEDT). Markets expect around 50k new jobs, a slight rise in the unemployment rate to 4.5%, and core inflation near 3%.

If labor data comes in slightly stronger, say 60–70k new jobs with unemployment at 4.4–4.5% and inflation broadly as expected, it would suggest the economy is not slowing sharply and that rate cuts still have room, potentially putting modest pressure on gold bulls.

Conversely, if the labor market shows a clear weakness—negative job growth, unemployment rising to 4.6% or higher, and core inflation falling to 2.8–2.9%—markets may price in a "recession trade," which would clearly benefit gold.

Additionally, several Fed officials, including Williams and Bostic, are scheduled to speak this week. Their comments on economic prospects and policy direction could further influence expectations for future easing, amplifying short-term price swings.

Globally, central bank policy divergence is also significant. The market widely expects the Bank of England to cut rates by 25bps, while the Bank of Japan has over a 90% chance of a rate hike. Diverging paths among major central banks could, via currency and rate channels, further intensify short-term gold volatility.

Source: Pepperstone

Business Confidence Rises as Japan Navigates External Pressures

Strength in Capital Investment Supports Policy Shift

Short-Term Optimism Dampened by Medium-Term Caution

Mixed Economic Signals Offer Conditional Support for BOJ Hike

Source: Reuters

AUD/USD is attempting a fresh increase from 0.6630. NZD/USD is consolidating and could aim for a move above 0.5800 in the short term.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

· The Aussie Dollar started a minor pullback from 0.6685 against the US Dollar.

· There is a key bullish trend line forming with support at 0.6645 on the hourly chart of AUD/USD at FXOpen.

· NZD/USD is consolidating above 0.5765 and 0.5755.

· There is a major bullish trend line forming with support at 0.5765 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair formed a base above 0.6600. The Aussie Dollar started a decent increase above 0.6630 against the US Dollar to enter a short-term positive zone.

The pair struggled above 0.6680 and recently corrected some gains. The recent low was formed at 0.6632. The pair is now consolidating and facing resistance near the 50% Fib retracement level of the downward move from the 0.6677 swing high to the 0.6632 low at 0.6655 and the 50-hour simple moving average.

The AUD/USD chart indicates that the pair could struggle to clear the 76.4% Fib retracement at 0.6665. The first major hurdle for the bulls could be 0.6685.

An upside break above 0.6685 resistance might send the pair further higher. The next major target is near the 0.6720 level. Any more gains could clear the path for a move toward 0.6750. If there is no close above 0.6665, the pair might start a fresh decline.

Immediate bid zone could be near the 0.6645 level. There is also a key bullish trend line forming with support at 0.6645. The next area of interest is 0.6630. If there is a downside break below 0.6630, the pair could extend its decline toward 0.6600. Any more losses might signal a move toward 0.6570.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed AUD/USD. The New Zealand Dollar failed to stay above 0.5800 and corrected gains against the US Dollar.

The pair dipped below 0.5790 and the 50-hour simple moving average and 0.5830. A low was formed at 0.5765, and the pair is now consolidating below the 23.6% Fib retracement level of the downward move from the 0.5831 swing high to the 0.5765 low.

The NZD/USD chart suggests that the RSI is below 40, signaling a short-term negative bias. On the upside, the pair is facing resistance near the 50% Fib retracement level at 0.5800.

The next major hurdle for buyers could be 0.5815. A clear move above 0.5815 might even push the pair toward 0.5830. Any more gains might clear the path for a move toward the 0.5880 pivot zone in the coming sessions.

On the downside, there is support forming near the 0.5765 zone and a bullish trend line. If there is a downside break below 0.5765, the pair might slide toward 0.5740. Any more losses could lead NZD/USD into a bearish zone to 0.5710.

Source: FXOpen

Market drivers and catalysts

Macro headlines

Equities

Volatility

Digital Assets

Fixed Income

Commodities

Currencies

Source: SAXO

In focus this week

Today is expected to be somewhat quiet on the data front, although we highlight speeches from New York Fed President John Williams and Fed Governor Stephen Miran in the evening. Markets will be looking for comments on US monetary policy.

The rest of the week will offer many interesting figures ahead of key central bank meetings on Thursday. Important for the euro area, flash PMIs will be released on Tuesday, the final inflation print for November on Wednesday and the ECB growth forecast on Thursday.

Across the Atlantic, the delayed US nonfarm payrolls and full November Jobs Report are set for release on Tuesday along with October retail sales data and December flash PMIs. On Thursday, the November CPI is due for release in the afternoon.

All eyes will be on the Thursday central bank meetings from the ECB, Riksbank, Norges Bank and Bank of England (BoE). Market consensus expects the ECB to leave the deposit rate unchanged on the back of data coming in stronger than expected by the ECB staff. We also expect the Riksbank and Norges bank to keep interest rates steady in line with market pricing. The BoE is expected to cut the bank rate, but the labour market report on Tuesday and November CPI figures on Wednesday may play a role in the final outcome.

Rounding off the week, the Bank of Japan (BoJ) will hold its meeting. Markets have increasingly expected the BoJ to hike the interest rate in recent weeks as Governor Ueda said he will "consider pros and cons".

Economic and market news

What happened overnight

In China, the monthly batch of data showed retail sales growth declining to 1.3% in November from 2.9% in October. Industrial output growth slowed marginally to 4.8% y/y in November from 4.9% y/y in October. The figures were below expectations of 2.8% and 5.0% respectively. The housing market continued to weaken, with home prices declining 0.4% m/m and 2.4% y/y in November. As expected, China continues to be a two-speed economy with strong exports and tech development but weak domestic demand.

In Japan, the quarterly Tankan business survey showed manufacturing sentiment rising to +17 in December from the already high level of +15 in September. Sentiment improved in manufacturing to +11 from +7, while the non-manufacturing sentiment stayed at +21. The overall sentiment was +24, +21 and +11 for Large-, Medium- and Small Enterprises respectively. The business sentiment remained fairly strong, however the forecast for next quarter expects sentiment to take a smaller decline as businesses eye a BoJ hike this week.

In the US, we had the first comments following the FOMC December meeting, however they did not provide any clear new signals. Goolsbee was not "hawkish" on interest rates next year, but felt optimistic that they could fall this year, although he felt uncomfortable front loading looser monetary policy. Hammock commented on the labour market gradually cooling but also pointed at inflation remaining above target.

In Sweden, the labour force survey (LFS) for November showed encouraging employment growth of 0.6% m/m. The unemployment rate remained at high levels but edged down to 9.1% SA from 9.3%. The Riksbank will likely continue to express concerns about the labour market during their meeting on Thursday. SPES unemployment declined for the fourth consecutive month in November to 6.7%.

In Germany, the final inflation data for November confirmed the flash estimates. CPI held steady at 2.3% y/y with electricity prices declining 1.5% y/y and food inflation remaining at low levels of 1.2% y/y. The large upside surprise in the HICP index was also confirmed, which rose to 2.6% y/y. HICP services inflation was the culprit behind the surprise as it rose to 4.2% y/y from 3.6% y/y.

Equities: Global equities had a rough end to the week, as renewed concerns around lofty tech valuations weighed on risk sentiment and pushed major indices lower. The S&P 500 ended Friday down 1.1%, resulting in a negative week overall. Friday's session showed a clear defensive tilt, with cyclicals underperforming by almost 1 percentage point. The Nasdaq ended the day 1.7% lower, while the Russell 2000 declined by around the same magnitude. Over the week as a whole, the MSCI World index ended the week down only around 0.2%.

FI and FX: We have a busy week ahead of us with plenty of central bank meetings and with very different outcomes. We have Norges Bank and the Riksbank meeting on Thursday together with the ECB and Bank of England and finally, Bank of Japan on Friday. The Bank of England is expected to cut rates, while BoJ is expected to hike rates – both by 25bp. ECB, Norges Bank and the Riksbank are all on hold, although Norges Bank is expected to signal a cut in March and the ECB is expected to signal they are on hold and possibly reverse some of the repricing we have seen lately.

Source: Danske Bank