Gold edges higher as the USD weakens; gains capped amid easing geopolitical tensions

• Gold sees modest buying interest on Tuesday as the USD takes a breather from its rebound off a four-year low.
• Kevin Warsh’s nomination as the next Fed Chair may help limit USD downside and restrain gains in the precious metal.
• Easing geopolitical and trade tensions could continue to cap further upside in XAU/USD.

Gold (XAU/USD) extends Monday’s rebound from the $4,400 area — its lowest level since January 6 — and picks up modest follow-through during the Asian session on Tuesday. However, the metal struggles to sustain the upside momentum, paring part of its intraday gains and easing back toward the $4,856 zone amid a confluence of bearish factors.

US President Donald Trump’s nomination of Kevin Warsh as the next Federal Reserve Chair has removed a major source of uncertainty. In addition, a stronger-than-expected US ISM Manufacturing PMI released on Monday has helped the US Dollar hold onto its recent recovery from a four-year low, creating headwinds for gold prices.

Further weighing on the precious metal are signs of easing US–Iran tensions over Iran’s nuclear program, the US–India trade agreement, and CME Group’s decision to increase margin requirements for precious metals futures. These factors, combined with a generally positive risk tone in global equity markets, call for caution among XAU/USD bulls.

As a result, it may be prudent to wait for sustained follow-through buying before concluding that the recent sharp corrective decline from the $5,600 region — the record high reached last week — has fully played out. Looking ahead, the US JOLTS Job Openings data could provide fresh direction later in the North American session.

Daily Digest Market Movers: Gold supported by a weaker USD; upside remains limited amid upbeat risk sentiment

US President Donald Trump on Friday nominated Kevin Warsh to replace Jerome Powell as Federal Reserve Chair in May, subject to Senate confirmation. Given Warsh’s hawkish credentials, he is expected to remain alert to any rise in inflation expectations.

Separately, CME Group announced over the weekend that margin requirements for precious metals futures will be raised from Monday’s market close. This triggered a second consecutive day of liquidation, pushing gold to a four-week low on Monday.

On the data front, the Institute for Supply Management reported that US manufacturing activity expanded for the first time in a year. The Manufacturing PMI jumped to 52.6 in January from 47.9 previously, signaling a sharp rebound.

Meanwhile, Trump said on Monday that the US and India have finalized a trade agreement and will immediately begin lowering tariffs on each other’s goods. In addition, expectations that the US and Iran will resume nuclear talks on Friday further lifted investor confidence.

The US Dollar eases on Tuesday, retreating from an over one-week high reached the previous session, offering some support to gold during Asian trading. However, the aforementioned headwinds may continue to cap upside in the precious metal.

Market participants will look ahead to the US JOLTS Job Openings report on Tuesday, followed by Wednesday’s US ADP private employment data and ISM Services PMI. These releases, along with Fed commentary, are likely to influence the USD and XAU/USD.

Gold’s mixed technical picture calls for caution before aggressive directional positioning

The commodity displayed resilience below its 50-day Simple Moving Average (SMA) and rebounded from the 50% Fibonacci retracement of the July 2025–January 2026 rally on Monday. The rising slope of the SMA indicates that downside moves may continue to attract buying interest. In addition, XAU/USD remains above the 38.2% retracement level, located around the $4,645–4,650 region, which should provide immediate support. The Relative Strength Index (RSI) is currently at 51.91 and trending higher, signaling stabilizing momentum.

That said, the Moving Average Convergence Divergence (MACD) remains below both the signal line and the zero line, maintaining a bearish bias. The expanding negative histogram suggests that downside momentum is gaining traction. On the upside, any further recovery could shift focus toward the 23.6% retracement at $4,995.94. Conversely, a failure to defend the initial support zone may leave the rebound exposed to deeper consolidation.

Sources: Haresh Menghani