Gold prices declined sharply on Thursday, falling to their lowest level in nearly a week, as robust US labour market data and intensified technical selling weighed on investor sentiment.

Strong Employment Data Weakens Rate-Cut Expectations

The sell-off followed fresh evidence of resilience in the US economy. January nonfarm payrolls rose by 130,000, while the unemployment rate edged down to 4.3%. Initial jobless claims also declined, pointing to sustained strength in labour market conditions.

These indicators reinforce expectations that the Federal Reserve may keep interest rates elevated for longer to ensure inflation remains under control.

For gold, a prolonged high-rate environment is unfavourable. As a non-yielding asset, bullion becomes less attractive when returns on fixed-income and money-market instruments remain elevated.

Technical Breakdown Accelerates Decline

In addition to macroeconomic pressures, technical factors played a major role in amplifying losses.

Gold prices breached the key psychological level of $5,000 per ounce, triggering widespread stop-loss orders and automated selling. This led to a rapid increase in downward momentum, resulting in a cascading decline within a short period.

Such moves underline the growing influence of algorithmic and leveraged trading in commodity markets, where key support levels often act as catalysts for sharp price adjustments.

Inflation Data Becomes Key Near-Term Driver

With labour market data reinforcing the case for policy stability, investor focus has now shifted to upcoming US inflation figures.

Market expectations point to a moderation in headline consumer price inflation. A softer reading could revive expectations of monetary easing later in the year, potentially providing support to gold prices. Conversely, persistent inflation may strengthen the case for restrictive policy, limiting near-term upside.

Technical Summary

Gold futures (COMEX May 2026) are trading near $5,011.5/oz, maintaining strength above the 21-day and 50-day moving averages, indicating stable medium-term structure. The RSI near 55 reflects balanced momentum and ongoing consolidation. Immediate support is placed at $4,980–$5,000, followed by $4,900 and $4,650. Key resistance levels are seen at $5,100 and $5,180–$5,220. Price action suggests continued range-bound movement, with direction dependent on a breakout from current levels.

Outlook: Data-Driven and Volatile Environment

In the near term, gold prices are likely to remain sensitive to macroeconomic indicators and central bank signals. Continued strength in US economic data may restrict upside, while key technical levels will influence short-term direction.

At the same time, any meaningful slowdown in inflation or shift in policy outlook could restore demand for bullion as a hedge against economic and financial uncertainty.

For now, the sharp correction highlights the fragile balance between fundamentals and market positioning, suggesting that volatility in gold prices is likely to persist in the coming weeks.

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