Gold Price Forecast: XAU/USD drifts higher to $2,020 amid Middle East tension
Source Fxstreet
- Gold price gains ground near $2,025 amid the ongoing tension in the Middle East.
- The US Core PCE gauge registered its lowest level since March 2021, coming in at 2.9% YoY in December vs. 3.2% prior.
- The rising tension in the Middle East might boost the price of gold, a traditional safe-haven asset.
- Traders will closely monitor the Federal Open Market Committee (FOMC) meeting on Wednesday.
Gold price snaps the two-week losing streak during the early Asian session on Monday. The escalating tension in the Middle East boosts the safe-haven demand, which lifts the yellow metal. The spotlight this week will be the Federal Open Market Committee (FOMC) meeting on Wednesday, which is expected to keep rates at 5.25–5.50%. At press time, the gold price is trading at $2,025, gaining 0.33% on the day.
The Personal Consumption Expenditures Price Index (PCE) came in at 0.2% MoM and 2.6% YoY in December, according to Commerce Department data released Friday. The core PCE figure, excluding energy and food, rose 2.9% annually, a slower pace than the 3.2% rate seen in November. The core PCE gauge registered its lowest level since March 2021.
The markets anticipate the Federal Reserve (Fed) to keep rates steady at 5.25–5.50% at its January meeting on Wednesday. Traders will take more cues from the press conference. If Fed Chairman Jerome Powell signals a possible rate cut in March, this could exert some selling pressure on the Greenback.
Three US troops were killed and dozens injured after an unmanned aerial drone attack on US forces stationed in northeastern Jordan near the Syrian border, US officials said on Sunday. The rising tension in the Middle East might boost a safe-haven asset like gold.
Looking ahead, the FOMC meeting on Wednesday will be the highlight of this week ahead of the Bank of England (BoE) interest rate decision on Thursday. These events could give a clear direction to the gold price.
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
Bitcoin experienced a sharp decline this weekend, briefly erasing its 2025 gains and dipping below its year-opening value of $93,507. The cryptocurrency fell to a low of $93,029 on Sunday, representing a 25% drop from its all-time high in October. Although it has rebounded slightly to around $94,209, the pressures on the market remain significant.
The downturn occurred despite the reopening of the U.S. government on Thursday, which many had hoped would provide essential support for crypto markets. This year initially appeared promising for cryptocurrencies, particularly after the inauguration of President Donald Trump, who has established the most pro-crypto administration thus far. However, ongoing political tensions—including Trump's tariff strategies and the recent government shutdown, lasting a historic 43 days—have contributed to several rapid price pullbacks for Bitcoin throughout the year.
Market dynamics are also being influenced by Bitcoin whales—investors holding large amounts of Bitcoin—who have been offloading portions of their assets, consequently stalling price rallies even as positive regulatory developments emerge. Despite these sell-offs, analysts from Glassnode argue that this behavior aligns with typical patterns seen among long-term investors during the concluding stages of bull markets, suggesting it is not indicative of a mass exodus.
Notably, Bitcoin is not alone in its struggles, as Ethereum and Solana have also recorded declines of 7.95% and 28.3%, respectively, since the start of the year, while numerous altcoins have faced even steeper losses.
Looking ahead, questions linger regarding the viability of the four-year cycle thesis, particularly given the increasing institutional support and regulatory frameworks now in place in the crypto landscape. Matt Hougan, chief investment officer at Bitwise, remains optimistic, suggesting a potential Bitcoin resurgence in 2026 driven by the “debasement trade” thesis and a broader trend toward increased adoption of stablecoins, tokenization, and decentralized finance. Hougan emphasized the soundness of the underlying fundamentals, pointing to a positive outlook for the sector in the longer term.
