*) See also: InstaSpot trading indicators for XAU/USD
The XAU/USD pair is setting record highs for the 6th trading day in a row, trading confidently near the psychologically important 5100.00 threshold in the first half of the European trading session and demonstrating sustained demand for gold from investors, central banks, and exchange-traded funds.This unprecedented rally is not a random spike but a result of a powerful convergence of fundamental factors that have turned gold into the main safe-haven asset of modern times.
The key driver of growth remains the combination of geopolitical uncertainty, the weakness of the US dollar, and expectations of a dovish Federal Reserve, creating a favorable environment for non-yielding assets.
The continuous rise in prices is supported by three key drivers:
1. Fed meeting on January 27 and 28. Although the rate will almost certainly remain unchanged (at 3.75%), the tone of Jerome Powell's comments will be crucial for the market."Dovish" scenario. Hints at imminent or deeper policy easing will lead to further dollar weakness and new growth in gold."Hawkish" scenario. Warnings about inflation risks and signals of a prolonged pause in rate cuts may temporarily strengthen the dollar and provoke a correction in gold.
2. Threat of a US government shutdown. The intensification of intraparty conflict in Congress and the risk of halting funding for government entities may exacerbate the flight from the dollar and fuel the "Sell America" trade, further supporting gold.
Despite the narrative of de-dollarization, it is important to note the paradox also observed by some economists: demand for US Treasury bonds (national debt) remains high; the use of the dollar in international transactions (according to SWIFT data) continues to rise.
This means that the weakening of the dollar is more tactical than catastrophic for it, and a turnaround in market sentiment is possible if the macro picture changes.
In short, the market is in a state of overboughtness, but the trend is strong.
From a technical perspective, gold shows a pronounced impulsive rise. The psychological level of 5000.00 was already surpassed at the opening of Monday's trading. Now the nearest task for the bulls is to overcome and consolidate above the 5100.00 mark ("round" level and upper boundary of the ascending channel on the weekly chart). If the current dynamics are maintained, the next targets could be 5200.00–5250.00.
However, the 6-day continuous rise also indicates extreme overboughtness. Any negative trigger or profit fixation could provoke a technical correction. The first (short-term) support levels for such a scenario are around 5000.00–4970.00 (EMA50 and the lower line of the ascending channel on the 1-hour chart), while a more serious one lies in the zone of 4800.00 (EMA50 and the lower line of the ascending channel on the 4-hour chart) – 4788.00 (EMA200 on the 1-hour chart).
Given the continued weakness of the US dollar, geopolitical tensions, and expectations of a dovish Fed, gold may continue to rise, aiming to consolidate above 5100.00 and transition into a new phase of the upward trend.
A correction is possible in the event of unexpectedly hawkish Fed rhetoric, a sharp improvement in global risk appetite, or a rebound in the US dollar. However, even in this case, the decline is likely to be limited and corrective in nature within the broader bullish trend. Either way, the bullish trend remains dominant, and any pullbacks are seen by the market as buying opportunities.
Gold is at the peak of a powerful uptrend, fueled by the perfect storm of geopolitics, a weak dollar, and structural growth in demand. The likelihood of surpassing the 5100.00 level in the coming days is extremely high.
However, investors should exercise increased caution. The market is overheated, and key events this week — the Fed's decision and the situation with US national debt — could trigger profit-taking and a technical correction. The long-term bullish trend is currently uncontested, but short-term volatility may increase sharply. A sensible strategy may be to watch how prices react to Fed news rather than chasing the market at current extreme highs.
*El análisis de mercado publicado aquí tiene la finalidad de incrementar su conocimiento, más no darle instrucciones para realizar una operación.
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