Dollar Holds Range, Gold Consolidates Amid Cooling Labor & Geopolitical Risks

Key Takeaways:

• U.S. dollar remains in a narrow, directionless range amid slowing labor momentum and resilient services activity.

• Gold remains structurally bullish, underpinned by falling real yields, geopolitical risk, and central bank accumulation.

Market Summary:

The U.S. dollar traded in a narrow, directionless range as markets digested a mix of cooling labor data, resilient services activity, and elevated geopolitical and policy risks. ADP private payrolls rose by 41,000 in December, below expectations, while JOLTS job openings fell to roughly 7.1 million, the lowest in about a year. These signals point to slowing labor momentum, keeping downside pressure on U.S. yields and limiting dollar upside. At the same time, the ISM Services PMI rose to its fastest pace in over a year, highlighting ongoing strength in the largest U.S. economic sector and providing a tentative signal of a “soft landing.”

From a policy perspective, Fed rate-cut expectations remain muted, reflecting lingering inflation uncertainty. Short-dated yields have stayed stable, capping dollar weakness. Geopolitical risks, including Trump‘s actions on Venezuela’s oil flows, housing intervention, and strategic discussions around Greenland, have increased headline volatility, but flows remain selective, with investors awaiting clearer macro confirmation.

Gold has been supported by the same dynamics, benefiting from cooling real yields, elevated geopolitical risk, and expectations for eventual Fed easing. Despite a modest pullback from near-record levels due to profit-taking, technical de-risking, and Bloomberg Commodity Index rebalancing, the fundamental backdrop remains constructive. Gold continues to attract demand as a portfolio hedge rather than a pure crisis asset, with central bank accumulation, notably Chinas PBOC 14-month buying streak, providing a structural floor.

The interplay between dollar and gold is evident. Slower labor momentum and contained U.S. yields limit dollar upside while structurally supporting gold. Conversely, resilient services activity and selective equity inflows keep the dollar from sharp declines and temper golds near-term upside. Geopolitical uncertainty continues to underpin both markets: the dollar remains a tactical safe-haven, while gold benefits from its role as a medium-term hedge against policy and sovereign risk.

The dollar remains range-bound, with near-term direction dependent on Fridays Non-Farm Payrolls, wage growth, and labor-market trends. Gold is structurally bullish but likely to trade with two-way volatility, with dips attracting buyers and a decisive break above $4,500/oz required to sustain upside momentum. Both markets are being driven by a delicate balance of macro signals, Fed expectations, and geopolitical risk, making them highly data- and event-sensitive over the coming days.