Gold market analysis and operation suggestions (February 6)

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News analysis:
Risk aversion dominates the market
Trade frictions escalate: The Trump administration's move to impose tariffs on China and the European Union has triggered market concerns about global trade conflicts, and investors have flocked to safe-haven assets such as gold.

Geopolitical risks: Trump's proposal on Gaza has triggered global criticism, further exacerbating market uncertainty and driving the safe-haven demand for gold.

Weak US economic data
ISM service PMI performance is poor: The US ISM service PMI data for January was lower than expected, showing a slowdown in service industry activity, increasing market concerns about the US economic outlook.
U.S. Treasury yields plummeted: The 10-year U.S. Treasury yield fell sharply, hitting a new low in nearly a month and a half, reflecting the market's pessimistic expectations for economic growth, further supporting gold prices.

Weak US dollar
The U.S. dollar index fell: Due to poor performance of US economic data, the U.S. dollar index continued its decline and fell to a one-week low. A weaker dollar is usually conducive to higher gold prices denominated in U.S. dollars.

Fed policy expectations
Fed officials' cautious attitude: Fed officials expressed concerns about the inflationary impact of tariff policies and hinted that further interest rate cuts may be possible in the future. This loose monetary policy expectation also supported gold prices.

Market focus
U.S. employment report: Investors look forward to Friday's U.S. non-farm payrolls report for more clues about the state of the U.S. economy and the direction of the Fed's monetary policy. Bank of England interest rate decision: The Bank of England's policy decision may also have an impact on global market sentiment, which in turn affects gold prices.

Technical analysis
Trend line breakthrough
Gold prices broke through the key resistance level of $2,850 yesterday and turned into support, indicating that the bulls are strong and the bullish space is further opened. The market trend is expected to remain above the trend line after the breakthrough, and $2,850 will become a key support level.

Short-term correction
After rising for five consecutive trading days and setting a record high, gold prices pulled back during the day and traded at $2,860/ounce, down 0.40% on the day.
This pullback was 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 downside space.
Adjustment and trend
Gold began to fall back and adjust after being under pressure at $2,873 several times in the afternoon of the Asian session. The adjustment is reasonable, but it does not change the bullish trend of gold. After the adjustment is in place, gold is expected to continue to rise.

Operation suggestions:
Short-term resistance above: 2870-2875 US dollars

Short-term support below: 2835-2840 US dollars

Specific operation strategy:
Gold falls back to 2838-2840 and goes long, stop loss 2833, target 2878-2880; continue to hold if it breaks!

Gold rebounds to 2870-2875 and goes short, stop loss 2880, target 2840-2845.

Summary and Outlook
Short-term trend: Gold has a technical correction after continuous rise, but fundamental factors (such as trade frictions, weak economic data, and Fed policy expectations) still provide support for gold prices.
Key support and resistance: $2,850 has become a key support level, and it continues to be bullish above this level; if it falls below this level, it may face a certain adjustment space.
Market focus: Investors need to pay close attention to Friday's US non-farm payroll report, the Bank of England's interest rate decision, and the speeches of Fed officials, which will have an important impact on gold prices.

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Analysis of the latest gold market trends:

Analysis of gold news: During the U.S. trading session on Thursday (February 6), after rising for five consecutive trading days and hitting a record high, spot gold prices experienced a correction during the day, trading at $2,851 per ounce, down 0.55% during the day. This correction was mainly affected by a slight rebound in the US dollar and improvement in market risk sentiment, but fundamental factors still provided support for gold and limited its downside. Recently, driven by multiple factors, gold prices have continued to rise and hit a record high on Wednesday. However, as the U.S. 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 decline during the European session on Thursday. Despite this, market concerns about U.S. President Trump's tariff remarks and the Federal Reserve's expectations of rate cuts still provide solid support for gold.

Gold technical analysis: The price of gold rose again strongly yesterday, breaking through the resistance of US$2,850 at the trend line pressure position. The bulls increased their efforts again, and the bullish space opened up again. Therefore, the resistance turned into support, and the market outlook is expected to remain above the trend line after the breakthrough. Therefore, US$2,850 became a key support. Above this, bullish rebounds will continue, and below this, there will be some room for adjustment. After gold was under pressure at 2,873 several times in the afternoon, gold began to fall back and adjust. After the continuous rise of gold, the adjustment is reasonable, but the adjustment does not change the bullish trend of gold. Gold will continue to rise after the adjustment.

From a technical point of view, the gold daily chart shows that despite the overbought situation, the bullish momentum prevails, because the technical indicators are still pointing upward despite the development at extreme levels. At the same time, the gold price rose further above the bullish moving average, and the 20-day simple moving average (SMA) rose sharply to around $2,750/ounce. In the short term, according to the 4-hour chart, the risk of gold price trend tends to be upward. Technical indicators resumed rising after overbought levels and limited pullbacks, indicating that buyers are still willing to cover positions at low levels. Finally, gold prices are well above all bullish moving averages, with the shorter-term 20-period SMA near $2,825/oz. The gold market continues to be bullish. Today, the gold price focuses on the support below at $2,830. If it falls back, it will continue to go long above this support. If it breaks through, it will look at the high point of $2,870. If it breaks through, it will look at the $2,900 line. Overall, our professional and senior gold analyst team recommends that the short-term operation of gold today is mainly long on pullbacks, supplemented by shorting on rebounds. The short-term focus on the upper side is the resistance line of 2860-2865, and the short-term focus on the lower side is the support line of 2825-2830.

Gold operation strategy:

1. Gold returns to the 2830-2833 line to go long, stop loss at 2823, and target the 2858-2860 line; continue to hold if the position is broken!

2. If gold rebounds and does not break the 2858-2860 line, you can go short, stop the loss at 2868, and target the 2835-40 line;

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On Friday (February 7), the non-farm data was weak but the unemployment rate and wages were unexpectedly strong, with 143,000 new jobs, less than the market's expectation of 170,000. The unemployment rate was 4.0%, expected to be 4.1%, and the annual wage growth rate was 4.1%, expected to be 3.8%. The market's expectations for the Fed's future interest rate hike path have declined. The monthly average hourly wage rate of the non-farm data exceeded everyone's expectations, at 0.5%, while the median of the survey was 0.3%. Among the 62 people surveyed, the highest forecast was 0.4%.

The number of new non-farm jobs in November was revised up by 49,000 from 212,000 to 261,000; the number of new non-farm jobs in December was revised up by 51,000 from 256,000 to 307,000. After the revision, the total number of new jobs in November and December was 100,000 higher than before the revision. Job growth occurred in the fields of health care, retail trade and social assistance. Employment in mining, quarrying, and oil and gas extraction fell, and the unemployment rate fell slightly to 4.0% in January after annual adjustments to account for population control. The total number of unemployed people was 6.8 million. Hiring slowed in January as wildfires and snowstorms curbed the development of some industries, while the Federal Reserve hinted that it would pause the process of interest rate cuts, which brought adverse factors to economic growth. The market reacted immediately. As the data was released, the US dollar index surged 50 points, hitting a new intraday high, and then fell back to 107.8929.

Shorts increased their short positions after gold prices surged to $7. Gold rose $7 to $2,870 in the minute but quickly fell $18 to $2,852. Spot silver fell sharply, then rebounded to give up losses, and now reported 32.229/ounce, up 0.11% on the day.

After the employment data was released, the yield on the US 10-year Treasury bond rose to 4.473% in volatile trading.

In terms of foreign exchange, after the release of the US non-farm data in January, the euro fell sharply against the US dollar, hitting a three-day low, but then rebounded to give up the losses and now reported 1.0375, down 0.07% on the day

Impact on the Fed's interest rate cut path

After the data was released, the market's expectations for further interest rate cuts by the Fed increased significantly. The slowdown in employment growth and the slowdown in wage growth suggest that the weakness in the labor market may continue. Analysts generally believe that if the employment growth in February continues to be sluggish, the Fed may further relax monetary policy in future interest rate meetings to stimulate economic recovery.

Well-known institutional economists believe that the weak non-farm data in January will further increase the market's expectations for the Fed to cut interest rates in May. Specifically, as the momentum of US economic growth weakens, the Fed may further cut interest rates in the coming months to support economic growth and ensure a stable job market. Against this background, further declines in the US dollar are possible, especially under the continued influence of global trade uncertainty and the situation between Russia and Ukraine, risk aversion will continue to dominate the market.

Technical analysis

From a technical perspective, the US dollar index has recently faced a strong support and pressure range, with 107.50 being the key support level in the near term. If it falls below this level, the market may further test the 106.70 area. Risk aversion is expected to push gold to continue to rise to the target area of ​​$2,890-2,900. From the perspective of US Treasury yields, pay attention to whether the 10-year Treasury yield will fall below the key support level of 4.40%. If it falls below this level, it will further push the market's expectations of a US recession.

Future trend outlook

Looking ahead, the non-farm payrolls report that is lower than expected may trigger expectations that the Federal Reserve will further ease monetary policy. As global economic uncertainty increases, the US dollar may continue to be under pressure, especially against the backdrop of rising expectations of a Fed rate cut. As a safe-haven asset, gold is expected to continue to benefit from growing investor demand, and prices are expected to break through $2,900. The US Treasury market will also benefit from safe-haven inflows, and yields may continue to decline.

Overall, the US dollar may continue to decline in the short term, while gold and US bonds may have opportunities to rise. The market needs to pay attention to the next policy changes of the Federal Reserve and the evolution of the global economy and geopolitics.