Gold (XAU/USD) trades firmly above the $5,000 psychological level during Monday’s Asian session, supported by fresh data showing continued buying by the People’s Bank of China (PBOC). Figures released over the weekend confirmed that China’s central bank added to its gold reserves for a fifteenth consecutive month in January.
At the same time, expectations that the US Federal Reserve could move toward interest rate cuts, along with renewed concerns over the central bank’s independence, have weighed on the US Dollar for a second straight day. The softer greenback has helped lift demand for the non-yielding precious metal. Still, gold remains capped below last week’s swing high despite the supportive backdrop.
Improving risk sentiment has limited further upside. Signs of easing tensions in the Middle East have encouraged flows into riskier assets, reflected in a generally positive tone across global equity markets. This has reduced safe-haven demand for gold. Many traders are also choosing to stay on the sidelines ahead of key US economic data due later this week, including the delayed Nonfarm Payrolls (NFP) report on Wednesday and the latest US inflation figures on Friday. These releases are expected to offer clearer guidance on the Fed’s policy outlook and, in turn, influence both the US Dollar and XAU/USD.
Daily Digest Market Movers: What’s driving gold prices
Data from the People’s Bank of China confirmed that the central bank extended its gold buying streak into January, underlining steady official demand amid ongoing fiscal and geopolitical uncertainties. China’s gold holdings rose by 40,000 troy ounces to 74.19 million ounces, with the total value of reserves climbing to $369.58 billion.
Market expectations for easier US monetary policy have also strengthened. According to the CME Group’s Fed Watch Tool, traders are assigning higher odds to multiple US interest rate cuts in 2026. These expectations were reinforced by recent US data pointing to softness in the labor market, which has supported the case for further policy easing.
Political pressure on the Federal Reserve has added another layer of uncertainty. US President Donald Trump said over the weekend that he could consider legal action against his newly nominated Fed chair, Kevin Warsh, if rates are not lowered. Earlier comments from US Treasury Secretary Scott Bessent, who did not rule out potential investigations if rate cuts are resisted, have intensified concerns over the Fed’s independence.
Meanwhile, broader de-dollarization trends have kept the US Dollar on the defensive, pushing it further away from last week’s two-week high. The weaker USD has continued to channel flows toward gold, although the positive mood in global equity markets has capped stronger gains.
On the geopolitical front, indirect talks between the US and Iran on Iran’s nuclear program concluded on Friday with an agreement to keep diplomatic channels open. This development has eased fears of an immediate military escalation in the Middle East, encouraging risk appetite and limiting demand for safe-haven assets such as gold.
With the release of the delayed US jobs report and inflation data approaching, bulls appear cautious. These indicators are expected to play a key role in shaping near-term expectations for US interest rates and the direction of XAU/USD.
Technical outlook: Gold faces key resistance near 200-hour SMA
Gold is currently testing the 200-hour Simple Moving Average (SMA), which is acting as an important near-term resistance level. A sustained move above this zone would strengthen the case for further upside and attract fresh buying interest.
Momentum indicators remain constructive but show signs of slowing. The MACD stays above its signal line and in positive territory, though the histogram is narrowing, suggesting easing upward momentum. The Relative Strength Index (RSI) stands near 64, keeping the bullish bias intact without signaling overbought conditions.
For now, the downward-sloping 200-hour SMA continues to cap gains. A clear break and close above this level would improve the short-term outlook, while another rejection could leave sellers in control and limit further advances.
