Gold prices remain firmly in an uptrend and are poised to test the key $5,000 per troy ounce level on Friday. The precious metal’s strong rally accelerates amid mounting US Dollar weakness and mixed US Treasury yields across the curve.
Fundamental Analysis Overview
Expectations of additional monetary easing by the US Federal Reserve (Fed) continue to support demand for the non-yielding yellow metal, even as geopolitical risks have eased following US President Donald Trump’s reversal on Greenland. The bullish momentum also appears largely undeterred by extremely overbought short-term technical conditions, reinforcing the view that Gold’s path of least resistance remains upward.
On Wednesday, Trump announced the cancellation of planned tariffs on European allies related to US control over Greenland, after reaching a preliminary framework with NATO leaders on future Arctic security cooperation. He also dismissed the possibility of taking Greenland by force, encouraging risk appetite. However, the positive market response proved short-lived, as dovish Fed expectations dominated, outweighing Thursday’s US economic data and pushing the US Dollar (USD) back toward its lowest level since January 6, last seen earlier this week.
Data from the US Bureau of Economic Analysis showed that final third-quarter GDP growth came in at 4.4%, marginally above the previous estimate of 4.3% and notably stronger than the 3.8% expansion recorded in the prior quarter. Meanwhile, the Core Personal Consumption Expenditures (PCE) Price Index — the Fed’s preferred inflation measure — rose 2.8% year-on-year in November, up from 2.7%, while the monthly increase remained steady at 0.2%.
Further weighing on the USD, the US Department of Labor reported that initial jobless claims edged up by 1,000 to 200,000 for the week ending January 17, below market expectations of 212,000. Despite the better-than-expected figure, the data failed to offer meaningful support to the greenback amid the broader de-dollarization trend. Investors now turn their attention to upcoming flash PMI releases for insight into global economic conditions, which could influence risk sentiment and shape Gold’s trajectory as it heads toward solid weekly gains.
XAU/USD Technical Analysis
The broader uptrend remains supported by an ascending channel originating from $3,805.69, with XAU/USD now having decisively broken above the channel’s upper boundary around $4,742.80. The Moving Average Convergence Divergence (MACD) remains firmly above the zero line and continues to trend higher, indicating strengthening bullish momentum. Meanwhile, the Relative Strength Index (RSI) stands at 81.25, deep in overbought territory, which may limit immediate upside as momentum becomes stretched.
That said, a sustained hold above the former channel ceiling opens the door for a continuation of the rally toward new highs. On the downside, initial support is seen near the ascending channel’s lower boundary at $4,437.79 should prices consolidate. A flattening MACD would point to fading upside momentum at elevated levels, while a pullback in RSI toward the 70 mark would help ease overbought conditions and reinforce trend stability. A failure to defend the breakout zone could trigger a move back into the previous range, whereas continued momentum would keep bullish control intact.
Sources: Fxstreet
THE ETERNAL SOVEREIGN 
Leave a comment