Gold remains close to all-time peak amid safe-haven flows, weak USD, ahead of Fed
- Gold gains positive traction for the seventh straight day amid sustained safe-haven buying.
- Fed rate cut bets keep the USD near a multi-month low and also support the precious metal.
- Traders now look forward to the crucial FOMC policy decision for some meaningful impetus.
Gold (XAU/USD) attracts fresh buyers following the previous day's late pullback from levels beyond the $5,100 mark, or the all-time high, and sticks to the positive bias for the seventh straight day on Tuesday. The US Dollar (USD) struggles to gain any positive traction or register any meaningful recovery from its lowest level since September 2025, touched on Monday, amid concerns over US President Donald Trump’s trade policies. Furthermore, dovish US Federal Reserve (Fed) expectations keep the USD bulls on the defensive and continue to act as a tailwind for the non-yielding yellow metal.
Adding to this, persistent geopolitical uncertainties turn out to be another factor that underpins the safe-haven Gold, which, so far, seems unaffected by the underlying bullish sentiment. The XAU/USD bulls, however, might refrain from placing fresh bets and opt to move to the sidelines ahead of the crucial Fed policy decision on Wednesday. Investors will look for more cues about the Fed's rate cut path, which will influence the USD and the commodity. Nevertheless, the supportive fundamental backdrop suggests that the path of least resistance for the bullion remains to the upside.
Daily Digest Market Movers: Gold continues to be underpinned by global flight to safety, dovish Fed and weak USD
- US President Donald Trump said on Saturday that he would impose a 100% tariff on Canada if it follows through on a trade deal with China. This follows Trump's Greenland tariff threat, though it was withdrawn later, and adds a layer of uncertainty.
- Moreover, heightened geopolitical risks stemming from the protracted Russia-Ukraine war continue to drive safe-haven flows. This, along with a bearish US Dollar and dovish Federal Reserve bets, pushes the Gold price higher for the seventh straight day.
- Policy shocks from the Trump administration have tarnished the US Dollar's reputation in global financial markets. Moreover, bets that the central bank would lower borrowing costs two more times this year dragged the USD to a four-month low on Monday.
- On the economic data front, the US Census Bureau reported on Monday that Durable Goods Orders rose 5.3% in November vs. expectations for a 0.5% growth. New orders excluding transportation increased 0.5%, while excluding defense it rose 6.6%.
- Meanwhile, Russia insisted that Ukraine must cede all of the Donbas region as part of any deal to end the war. Ukraine rejected the proposal outright as the US-brokered Russia-Ukraine peace talks in Abu Dhabi ended without a deal on Saturday.
- The USD bears, however, pause for a breather as the market focus remains glued to the outcome of a two-day FOMC meeting, due to be announced on Wednesday. Investors will look for more cues about the Fed's rate cut path, which will drive the USD.
- Hence, Fed Chair Jerome Powell's remarks during the post-meeting press conference might infuse volatility in the markets and influence the commodity amid sustained buying by central banks and record inflows into exchange-traded funds.
- In fact, the People's Bank of China (PBOC) extended its gold-buying spree for a fourteenth month in December, while the National Bank of Poland, Reserve Bank of India, and Central Bank of Brazil were active buyers in late 2025 and early 2026.
- Moreover, global demand for investments in gold through exchange-traded funds increased by 25% in 2025. Gold holdings rose to 4,025.4 tonnes from 3224.2 tonnes in 2024, and the total Assets Under Management in ETFs stood at $558.9 billion.
Gold retains a bullish bias amid the formation of an ascending trend channel
The overnight failure to break out through a short-term ascending channel and the subsequent pullback could be seen as the first sign of a possible bullish exhaustion. However, the emergence of fresh buying on Tuesday warrants some caution before confirming that the Gold price has topped out. Moreover, the ascending channel underpins the broader uptrend, with the lower boundary offering support near $4,971.48 as the XAU/USD pair holds mid-range. The Moving Average Convergence Divergence (MACD) histogram has flipped negative and is widening, indicating the MACD line has slipped below the Signal line around the zero level, and momentum is rolling over.
The Relative Strength Index (RSI) at 70.84 is overbought and easing, which could keep buyers cautious while the XAU/USD pair consolidates within the channel. On the topside, the channel’s upper boundary at $5,156.89 caps advances. A recovery in MACD toward a bullish crossover would be needed to reassert upside traction, while the elevated RSI argues for digestion before a sustained break. A 4-hour close above the cap would open the path to extend the uptrend, whereas failure to improve momentum would leave the bias vulnerable to further tests of the channel floor.
(The technical analysis of this story was written with the help of an AI tool.)
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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