Gold trades in a high-level range, capped at $5,100. Falling inflation, geopolitical risks, and central bank buying support prices, while strong U.S. jobs and risk-asset pullbacks limit gains. Key this week: FOMC minutes, geopolitics, and Trump tariff ruling.
By Dilin Wu, Research Strategist at Pepperstone
Over the past week, gold continued to trade in a range, with its upside consistently capped near the $5,100 key resistance. Falling U.S. inflation, geopolitical uncertainty, and ongoing central bank purchases have provided medium-term support; however, strong nonfarm payrolls, risk asset pullbacks, and concentrated profit-taking at technical highs have limited further upward movement.
The market remains in a phase of rebalancing between bulls and bears, lacking clear catalysts to break the range. Beyond U.S. economic data, developments in geopolitical tensions and potential tariff rulings are expected to influence gold’s next move.
Technical Outlook: $5,100 as Key Resistance
On the XAUUSD daily chart, gold formed an upward channel after bouncing from $4,400, with gradually higher lows maintaining a bullish structure. Yet, at $5,100, multiple attempts to push higher failed, as profit-taking at the top generated selling pressure, highlighting the risk of a pullback.
If short-term bears dominate, the lower boundary of the February upward channel near $4,900, and further down at $4,640, may provide support. Conversely, a sustained break above $5,100 could open the way toward $5,180–$5,200, representing key resistance levels before challenging new highs.
Fundamental Support: Falling Inflation, Geopolitical Risks, and Central Bank Buying
Despite repeated resistance at $5,100, gold is not lacking support; rather, it is in a rebalancing
phase where upside momentum is limited and downside risk is contained. Three key factors underpin the market.
First, falling inflation strengthens easing expectations. U.S. inflation cooled across the board in January, with core CPI rising just 2.5% YoY, the lowest since March 2021. Weaker inflation has significantly boosted market expectations for a June rate cut, with probabilities now exceeding 80%. This reduces the opportunity cost of holding non-yielding assets while limiting potential USD rebound, supporting gold prices.
That said, the marginal positive effect of inflation is fading. Gold briefly spiked following the data but remained within its range, indicating that employment data still dominate expectations for the Fed’s rate path. With Powell’s term nearing its end, the Fed is likely to maintain a wait-and-see approach, keeping policy uncertainty high and gold volatility elevated.
Second, geopolitical uncertainty cushions downside risk. The U.S. has confirmed it is considering deploying a second aircraft carrier to the Middle East, while the U.S. and Iran will hold a second round of indirect talks in Geneva on February 17, covering the nuclear agreement, energy, and mineral investments. The combination of negotiation and pressure keeps the situation highly uncertain.
While the Russia–Ukraine situation has eased temporarily, trilateral discussions on a ceasefire are scheduled for February 17–18, leaving potential risks in place.
Overall, safe-haven demand remains robust, and market participants continue to maintain gold allocations. Even technical pullbacks are unlikely to trigger sustained declines.
A structurally important support factor is ongoing central bank buying. The People’s Bank of China has increased gold holdings for 15 consecutive months, and the World Gold Council expects global central bank net purchases to exceed 755 tonnes in 2026, far above the historical average. ETF inflows are also returning, indicating institutional investors remain inclined to strategic allocations during pullbacks.
This long-term buying does not chase short-term swings but provides a floor during price dips, effectively raising gold’s “true bottom.”
Additionally, the current Chinese New Year season supports strong physical demand. Even with temporarily lower trading liquidity, end-user demand provides implicit support for prices.
Downside Pressure: Liquidity Strains and Risk Asset Pullbacks
Despite multiple positive factors, gold has failed to break higher, not only due to strong nonfarm payrolls but also the ongoing weakness in U.S. equities.
Recent volatility in AI-related assets has dampened risk appetite, causing correlated pullbacks across asset classes. Some leveraged funds are facing margin calls, and forced liquidations have further amplified downward pressure on gold.
Currently, bullish hesitation reflects the interplay of shrinking liquidity and shifting rate expectations. Employment data triggered the move, while quantitative trading and margin mechanisms amplified market reactions.
Geopolitical and Policy Risks to Watch
Overall, gold is consolidating at high levels. While upside requires new catalysts, the combination of falling inflation, geopolitical uncertainty, and sustained central bank purchases keeps downside risks contained. Short-term traders prefer range-based strategies rather than betting on one-way moves.
This week, Asian markets observe the Lunar New Year holiday, and the U.S. is closed for Presidents’ Day, likely reducing overall liquidity and magnifying price swings.
U.S. data releases this week include durable goods orders, Q4 GDP preliminary figures, and the core PCE price index. Given the recent nonfarm payrolls and CPI releases, these data points may have a supplementary rather than market-moving effect.
More importantly, the Fed will release minutes from its January policy meeting early Thursday (AEDT). Markets will look for clues on the timing of rate cuts and the pace of balance sheet reduction. A dovish signal could give gold another attempt to break $5,100, while a more hawkish tone may trigger a short-term pullback.
Beyond data, other potential risks deserve attention:
On one hand, unfavorable developments in U.S.–Iran or Russia–Ukraine negotiations could provide new catalysts for gold bulls.
On the other hand, the U.S. Supreme Court is expected to issue a ruling on Trump’s tariff measures on February 20. A decision against the tariffs could weigh on gold short-term, while a ruling upholding them may reinforce safe-haven demand.