According to today’s XAU/USD chart, gold opened the week with strong bullish momentum. Trading began with a gap higher above Friday’s peak, pushing prices decisively beyond the key psychological threshold of $5,000.

Several factors have contributed to gold’s advance, as reported by the media:

→ A softer US dollar. The greenback has come under pressure ahead of major US macroeconomic releases. The January jobs report is scheduled for Wednesday and is expected to indicate signs of labour market stabilisation, while inflation figures are due on Friday.

→ Political developments in Japan. The landslide victory of Prime Minister Sanae Takaichi has strengthened expectations of substantial fiscal stimulus under the so-called “Sanaenomics” agenda. Such expectations typically weigh on the yen and lend support to gold prices.

→ Central bank buying. Reports indicate that the People’s Bank of China continued to add to its gold reserves in January, marking the fifteenth consecutive month of purchases.

On 3 February, while assessing gold’s price dynamics, we:

→ highlighted that the market was deeply oversold within the framework of a long-term rising channel;
 → suggested that any rebound from extreme oversold levels could meet resistance near the channel’s median line, reinforced by the traditional Fibonacci retracement levels of 50% and 61.8%.

This scenario played out on 4 February. After recovering into the identified resistance zone and forming point C, prices reversed lower. By Friday, 6 February, gold had found support close to the lower boundary of the same channel.

XAU/USD Technical Outlook

The expanding price swings observed during the formation of low D signal aggressive buying interest, potentially pointing to activity from large market participants.

Meanwhile, an assessment of market structure using the A–B–C–D sequence suggests that, following a spike in extreme volatility around the turn of the month — clearly reflected by a surge in the ATR indicator — the market is now attempting to establish a new equilibrium.

As a result, it is reasonable to expect a period of reduced volatility in the near term. Supply and demand may settle into a temporary balance around the psychologically important $5,000 area.

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