Gold is gaining upside potential within the correction channel

The price of gold fell slightly at the beginning of the week amid a stronger dollar and rising yields on ten-year U.S. Treasury bonds after the publication of a report on employment growth in the U.S. This dampened investor expectations that the Federal Reserve would soon cut interest rates.

The strengthening of the dollar index to an eight-week peak increased the value of the yellow metal for holders of other currencies. At the same time strengthening of the ten-year Treasury bond yield to over 4% put additional pressure on the precious metal's value.

As data from the U.S. Department of Labor showed on Friday, the nonfarm payrolls increased 353,000 in January. This was almost double the forecast of 180,000 made by economists polled by Reuters.

Meanwhile, Fed Chairman Jerome Powell in his recent remarks ruled out the possibility of a rate cut in the spring. However, he expressed confidence in achieving the 2% inflation target in the foreseeable future.

In light of these statements, traders revised forecasts from six rate cuts by the U.S. regulator by 25 basis points to five in 2024, according to LSEG's IRPR app.

Investors are expecting a series of speeches from Fed officials this week, which could provide additional information about the future course of monetary policy.

Gold quotes on the H4 chart demonstrate the formation of correction. At the same time, this correction has an uptrend support. The price tends to this line. Moving Stochastic Oscillator is approaching the oversold zone. This indicates a possible trend reversal near the uptrend support.

Signal:

The short-term outlook for GOLD is to buy.

The target is at the level of 2085.00.

Part of the profit should be fixed near the level of 2055.00.

A Stop-loss could be placed near the level of 1998.00.

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.