Gold stands firm near all-time peak; supportive fundamental backdrop favors bulls

• Gold attracts buyers for the third straight day as rising geopolitical risks boost safe-haven demand.
• Concerns about the Fed’s independence weigh on the USD and further benefit the XAU/USD pair.
• Reduced bets for more Fed rate cuts might cap the commodity ahead of the key US inflation figures.

Gold (XAU/USD) retains its bullish bias for the third straight day and trades just below the $4,600 mark during the first half of the European session, close to the all-time peak, touched earlier this Monday. The US incursion in Venezuela, US President Donald Trump's threat of military action in response to the unrest in Iran, the Russia-Ukraine war, a China-Japan spat, and the White House’s insistence on acquiring Greenland keep investors on edge. This, in turn, takes its toll on global risk sentiment and continues to underpin the precious metal's safe-haven status.

Meanwhile, concerns about the US Federal Reserve's (Fed) independence drag the US Dollar (USD) away from its highest level since December 5, touched on Friday, and contributes to driving flows towards the non-yielding Gold. That said, the US jobs data released on Friday tempered expectations for aggressive Fed easing in 2026, which, in turn, caps the upside for the precious metal. Traders also seem reluctant to place fresh bullish bets around the XAU/USD pair and might opt to move to the sidelines ahead of the latest US inflation figures, due this week.

Daily Digest Market Movers: Gold benefits from global flight to safety, Fed independence concerns

• Following a strike in Venezuela earlier this month, US President Donald Trump said that Washington would temporarily take charge of Venezuela’s administration to oversee a transition. Furthermore, Trump referred to himself as the acting President of Venezuela in a post on Truth Social.
• The WSJ, citing unnamed US officials, reported that Trump is considering reprimanding Iran in response to its crackdown on mass anti-government demonstrators, which has killed more than 500 people. This, along with the intensifying Russia-Ukraine war, keeps geopolitical risks in play.
• In fact, a Ukrainian drone strike triggered a fire at an oil depot in Russia’s southern Volgograd region on Saturday. Russia, on the other hand, used its hypersonic Oreshnik intermediate-range ballistic missile in an overnight strike on the Lviv region, close to the EU and NATO borders.
• Separately, China escalated its dispute with Japan, restricting exports of rare earths and rare-earth magnets to Japan. The ban follows the recent Taiwan-related remarks by Japan’s Prime Minister. This pushes the safe-haven Gold to a fresh all-time peak during the Asian session on Monday.
• Meanwhile, US Federal Reserve Chair Jerome Powell said that the threat of criminal indictment against him is a consequence of the central bank setting interest rates based on the best assessment of what will serve the public, rather than following the preferences of the President.
• Powell added that the outcome of the investigation will determine the future of the central bank’s decisions. Traders pared their bets for more interest rate cuts this year after the US jobs report showed on Friday that the Unemployment rate fell to 4.4% in December from 4.6%.
• Meanwhile, the headline NFP showed that the economy added 50K last month compared to market expectations for a reading of 60K and November's 56K (revised from 64K). The data does little to impress the USD bulls amid rising worries about the US central bank's independence.
• Moving ahead, there isn't any relevant market-moving economic data due for release from the US on Monday, leaving the USD and the precious metal at the mercy of comments from influential FOMC members. The focus, however, remains on the US inflation figures this week.

Gold could pause for a breather near two-month-old ascending channel resistance

From a technical perspective, the recent move higher witnessed over the past month or so has been along an upward sloping channel. This points to a well-established short-term uptrend and favors the XAU/USD bulls. Moreover, Gold holds above the upward sloping 200-period Simple Moving Average (SMA), which underscores a positive trend and should offer dynamic support near the $4,325-4,320 region. The Moving Average Convergence Divergence (MACD) line extends above the Signal line and remains in positive territory, while a widening histogram suggests strengthening bullish momentum.

The Relative Strength Index (RSI) stands at 71.82 (overbought), which could temper immediate gains and invite consolidation near the upper boundary. A pullback would find support at the channel floor around the $4,365 area, with the rising 200 SMA underpinning the broader bullish bias. Sustained traction above these supports would keep the path higher intact, while a clear break above channel resistance would open a fresh leg toward higher territory.

(The technical analysis of this story was written with the help of an AI tool)