Gold rises after breaking out of triangle amid interest in safe-haven assets

Gold prices are correcting on Monday after reaching a one-month high of $2697.87 on Friday. Strong US employment data provided reassurance that the Federal Reserve (Fed) will approach rate cutting cautiously. 

This scenario supports the US dollar, which is trading near a two-years high. However, Donald Trump’s presidential inauguration on January 20 and his protectionist policy may contribute to rising inflation, increasing uncertainty in the market. 

According to the Friday’s data from the US Bureau of Labor Statistics, nonfarm payrolls rose by 256,000 in December, significantly surpassing last month’s increase by 212,000 and market’s estimations of 160,000. The unemployment rate fell to 4.1% from 4.2%. Annual wage growth slowed to 3.9%. 

These macroeconomic factors are putting pressure on gold. However, the persisting interest in safe-haven assets is limiting a deeper correction. Reports about local confrontations in different parts of the world intensify the uncertainty, fuelling demand for the precious metal as a safe-haven asset.

This week, investors will focus on the US monthly consumer price index release and speeches by several Fed’s representatives. These events may provide additional signals for the market.

From the technical point of view, gold prices broke through the upper limit of the triangle uncertainty pattern on the daily timeframe (D1). Bulls Power and Bears Power indicators (standard settings) remain positive on the H4 timeframe, confirming the prevalence of bullish sentiment.

Signal:

The short-term outlook for GOLD suggests buying.

The target is at the level of 2780.00.

Part of the profit should be fixed near the level of 2725.00.

The Stop loss could be placed at the level of 2625.00. 

The bullish trend is of a short-term nature, so it’s suggested to limit the trading volume to no more than 2% of your balance.