Gold (XAU/USD) remains in a tight range on Thursday as better U.S. employment data prompts traders to shelve expectations of an early interest rate cut by the Federal Reserve (Fed). At the time of writing, XAU/USD is trading around $5,060, remaining confined to this week’s $5,000-$5,100 consolidation range.

US employment data confirm that the Fed should stay in place for longer

Data released Wednesday by the U.S. Bureau of Labor Statistics (BLS) showed an unexpected acceleration in job growth in the U.S. economy. Non-farm payrolls (NFP) rose by 130,000 in January, well above expectations of 70,000. and marked the largest monthly enhance in the number of jobs since December 2024. At the same time, the unemployment rate fell to 4.3% from 4.4%.

Better labor market data limits the scope for near-term monetary easing, reinforcing expectations that the Fed is likely to remain unchanged for the next few meetings. This poses little headwind for gold given its interest-free nature.

However, the US dollar (USD) and Treasury yields failed to attract significant follow-up purchases following the report, providing some support for the bullion. The US Dollar Index (DXY), which tracks the value of the dollar against a basket of six major currencies, is trading around 96.80, hovering near one-week lows.

Traders also reviewed Wednesday’s comments from Fed officials. Kansas City Fed President Jeffrey Schmid said further interest rate cuts could allow inflation to remain elevated for longer, adding that it was still appropriate to maintain tight monetary policy with inflation close to 3%.

Moreover, Cleveland Fed President Beth Hammack said that the current federal funds rate is “close to neutral” and that it is appropriate for the Fed to remain unchanged, noting that interest rates are not holding back the economy much and that there is no need to adjust policy at this stage.

Despite this, markets are still pricing in a rate easing of close to 50 basis points for this year, and the CME FedWatch Tool indicates the first rate cut will most likely occur in June-July. Attention is now focused on Friday’s release of the US Consumer Price Index (CPI).

Elsewhere, tensions between the U.S. and Iran remain elevated, which continues to maintain geopolitical risks and helps mitigate the negative impact on Bullion. The Wall Street Journal reported on Wednesday that the United States is preparing to deploy a second aircraft carrier strike group in the Middle East, as the U.S. military prepares for the possibility of military action if negotiations over Iran’s nuclear program fail.

Given this backdrop, gold is likely to remain rangebound for the foreseeable future as fading expectations for early Fed rate cuts are offset by lingering geopolitical risks.

Technical Analysis: XAU/USD Consolidates Above $5,000 as Momentum Wanes

From a technical perspective, near-term momentum has moderated following the recent piercing correction, signaling that gold is entering a consolidation phase. The relative strength index (RSI) is hovering around 55, reflecting a neutral stance in the low term. The Average Directional Index (ADX) is near 8, indicating very frail trend strength, while the Average True Range (ATR) has started to shift, showing that price volatility is decreasing.

On the 4-hour chart, the XAU/USD pair is stabilizing above the 100-period uncomplicated moving average (SMA) near the psychological level of $5,000. A sustained break below this area would enhance downward pressure, with further support seen near $4,850, followed by the 200-period SMA.

On the other hand, a break above $5,100 is needed to revive the bullish momentum. However, the broader upward trend remains unchanged.