The precious metal is maintaining a solid bounce from its 100-day moving average (red line) to start the new year, now trading as high as $2,680 this week. A test of the $2,700 level beckons, before the next potential return to the late November-December highs around $2,725-26.

The main upside for gold at the start of the year is that the gains we’re seeing come despite rising yields and a stronger dollar. It really indicates the strength of the animal spirits currently surrounding the gold. That being said, it can be argued that gold is also benefiting from its typical January seasonal headwind. So there it is.

It’s still early days and there will be a big test for gold as soon as later today. The upcoming US jobs report could possibly be key in dictating trading sentiment for the month, so keep an eye out for that.

But given the optimism as shown above, I think the risks to the next reaction in gold could be quite asymmetric. If the US jobs report turns out to be softer and that weakens the dollar and Treasury yields, I think that will send gold higher in the week ahead.

As for the opposite outcome on the data, it may not necessarily lead to too much digging into gold. This in view of the firmer determination of dip buyers to start the year. But it will certainly be interesting to see how such a test plays out this early.

For now, the background is set as such. Gold is headed for a fourth straight day of gains, and things could get even hotter if U.S. labor market conditions come in below expectations later today.