Gold (XAU/USD) extends gains on Wednesday, reaching a fresh all-time high above $4,630 ahead of the US session opening. Precious metals remain firm, underpinned by safe-haven demand, amid geopolitical tensions and moderate US inflation figures.
US President Donald Trump urged Iranians to keep protesting on Tuesday, promising them that “help is on its way, as the victims of Tehran’s repression likely extend into the thousands. Meanwhile, US inflation figures have curbed expectations of an immediate Federal Reserve rate cut, though they keep hopes of two rate cuts in 2026 alive.
Technical analysis: Gold’s rally starts to look overstretched
XAU/USD trades at record highs at $4,634 at the time of writing. The bullish bias remains in play with moving averages trending higher. Technical indicators, however, are starting to give signs of an overstretched rally.
The 4-Hour Relative Strength Index (RSI) stands just below overbought levels, revealing a bearish divergence. The Moving Average Convergence Divergence (MACD) turns lower with the histogram contracting, which suggests that the bullish momentum is stalling.
Above $4,630, the next targets would be at the 127.2% and the 161.8% Fibonacci extensions of the January 8-12 rally, at $4,689 and $4,763, respectively. Support is seen at Tuesday’s low, near $4,570, and the January 2 low, right below $4,500.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
Source: https://www.fxstreet.com/news/gold-price-forecast-xau-usd-reaches-highs-past-4-630-on-geopolitical-tensions-202601141242
