The XAU/USD market maintained its high momentum above $5,000 after experiencing a rebound since the opening of the week amid the release of important economic data and market focus on the US-Iran nuclear weapons talks that will take place this weekend.
At 9 am, gold prices were at $5,005, up about 0.83% since it opened in early trading Thursday in the Asian session.
The precious metal traded mixed overnight as the US dollar remained stable, supported by calmer market sentiment following the end of the US government shutdown and positive reactions to the nomination of Kevin Warsh as the new Fed Chairman.
However, the Greenback's strengthening momentum seen over the past few days seems to be losing steam, with the market turning its focus to key economic data released last night.
The ADP private sector employment report showed an increase of only 22,000 jobs in January, far below market expectations, thus reflecting a slowdown in the US labor market.
The weak performance reinforced expectations that hiring activity is under pressure, particularly in the professional and business services sectors, limiting the potential for further USD strengthening in the near term.
Meanwhile, the US services PMI data remained stable at 53.8, indicating that the services sector is still in expansionary territory.
However, new orders and employment growth showed signs of slowing, reflecting more cautious business sentiment amid trade policy uncertainty and global geopolitical risks.
The combination of weaker ADP data and subdued services PMI is seen as providing support for gold prices, although pressure from a still-strong USD continues to limit more aggressive gains.
The market is now reassessing the outlook for Fed monetary policy, with the likelihood of policy easing remaining dependent on the trajectory of further economic data.
In addition, investors are also focused on geopolitical developments ahead of the US-Iran nuclear talks scheduled to take place this weekend in Oman.
The talks were resumed after diplomatic pressure from several Middle Eastern countries, with markets watching their potential impact on regional stability and the direction of global energy prices.
Any positive progress could potentially ease geopolitical concerns, thereby influencing the flow of safe-haven assets such as gold.
