As I have noted for many years, gold has a rough general tendency to decline ahead of the US jobs report, and then rally in the hours and/or days following the release of the report.

The next monthly jobs report will be released at 8:30AM on Friday. This report and the closure of the Chinese gold market for the New Year’s holiday should be quite negative for gold, but…

The sell-off from the $1220 area is orderly, and gold feels firm.

Gold did break down from a small double top pattern. 

The price target of the pattern is $1170, but there may be an uptrend channel forming. I’ve highlighted that in blue.

Also, the lead line of the 14,7,7 Stochastics series oscillator that I use exclusively on daily bar and candlestick charts is now sitting at about 50, where momentum-based rallies can occur.

With China offline and the jobs report dead ahead, why is gold acting so firmly?

The US dollar looks very weak on this daily bars chart against the Swiss Franc.

It’s broken down from a head and shoulders top pattern, and has not rallied since arriving at technical support yesterday.

The rally could still happen, and that would likely push gold down to $1170 ahead of the jobs report.

Given that gold has rallied from $1125 to $1220, a decline to $1170 is perfectly normal. An orderly decline like this should not make gold investors nervous.

All gold community eyes should be focused on the 112.50 price level. A breakdown below that level would almost certainly usher in a gold price rally to my $1250 target zone.

The Swiss franc, the Japanese yen, and gold bullion are all viewed as key “risk off” assets by bank FOREX traders.

It’s clear that the dollar is struggling now against both the franc and the yen.

The euro never rallied against the dollar in 2016 in the way that the franc, yen, and gold did.