Daily gold chart (XAU/USD).
The precious metal is holding a strong bounce off its 100-day moving average (red line) to start the new year, now trading up to $2,680 this week. A test of the $2,700 level is emerging, before a return to the late November and December highs around $2,725-26 next.
A key reason for gold to start the year is that the gains we are seeing are coming despite rising yields and a stronger dollar. That really indicates how strong the animal spirits are around gold right now. That being said, it can be argued that gold is also benefiting from the typical January tailwind. So, there's that.
It is still early days and there will be a big test for gold emerging as soon as today. The upcoming US jobs report could be key in dictating trading sentiment for the month, so keep an eye on that.
But considering the optimism as shown above, I think the risks for the next reaction in gold could be very inconsistent. If the US jobs report turns out to be softer and that weakens the dollar and Treasury yields, I think that will send gold higher in the coming week.
As for the other result on the data, it may not put too many teeth in gold. That's considering the stronger resolution of dip buyers to start the year. But it will certainly be interesting to see how such an early test turns out.
For now, the background is set as such. Gold is looking at a fourth straight day of gains and things could get even hotter if US labor market conditions beat expectations later today.
