XAU/USD. Analysis and Forecast

[Ben Graham]

Gold is struggling to capitalize on an intraday rebound from the $4,770–4,772 level, remaining below the all-time high recorded the day before. Expectations of two additional interest rate cuts by the U.S. Federal Reserve in 2026 have prevented the U.S. dollar from extending its overnight gains, becoming a key supportive factor for the yellow metal.U.S. President Donald Trump has backed away from threats of additional tariffs on eight European countries and ruled out a military takeover of Greenland. This has triggered a renewed rally in global risk assets and capped gold's upward potential as a defensive asset.

At the World Economic Forum in Davos, Trump announced a framework for a future deal with NATO on Greenland, removing the need for new tariffs on European countries. This neutralizes the risk of U.S. confrontation with NATO allies, prompting a reversal of the "Sell America" strategy, which supports the U.S. dollar and further weakens the precious metal.

U.S. Special Envoy Steve Witkoff announced a new meeting with Russian President Vladimir Putin on Thursday amid progress on a U.S.-backed 20-point peace plan for Ukraine. On Wednesday, Trump noted that Ukrainian President Volodymyr Zelensky and Putin have reached a point where a ceasefire agreement is possible, further undermining the position of the precious metal.

A Reuters poll showed that most economists expect the Fed's key interest rate to remain unchanged through the end of the quarter and possibly until May, when Jerome Powell's term expires.

Nevertheless, the market is pricing in two rate cuts in 2026. Concerns about political pressure on the Fed's independent policy are also limiting U.S. dollar strength. The release of the U.S. PCE inflation index and the final Q3 GDP report today will have a significant impact on the U.S. dollar and will set the direction for the XAU/USD pair.

From a technical perspective, gold is trading near its all-time high, but it is worth noting that oscillators on the daily chart are in overbought territory, suggesting consolidation or a pullback. Support is located at the 4,770 level, while resistance is at the record high.

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