Gold recovers early lost ground; holds comfortably above $4,800 as traders look to US data
|- Gold attracts some dip-buyers, though it remains below the all-time peak set on Wednesday.
- Receding safe-haven demand caps the commodity, though Fed rate cut bets help limit losses.
- Traders look to the US PCE Price Index for Fed rate cut cues and some meaningful impetus.
Gold (XAU/USD) recovers a major part of Asian session losses on Thursday and currently trades around the $4,925 region, or nearly unchanged for the day amid mixed cues. US President Donald Trump pulled back from his threat to slap additional tariffs on eight European nations and ruled out seizing Greenland by force. This, in turn, triggers a fresh wave of the global risk-on trade and acts as a headwind for the safe-haven precious metal.
Meanwhile, the so-called 'Sell America' trade recedes on the back of easing trade war fears and supports the USD. However, bets for two more rate cuts by the US Federal Reserve (Fed) in 2026 keep a lid on any further USD gains and help limit the downside for the non-yielding Gold. Traders now look forward to the release of the US Personal Consumption Expenditures (PCE) Price Index for more cues about the Fed's rate cut path and a fresh impetus.
Daily Digest Market Movers: Gold bears seem hesitant as Fed rate cut bets offset positive risk tone
- The global risk sentiment gets a strong boost in reaction to US President Donald Trump's U-turn on Greenland and drags the traditional safe-haven Gold away from the record high, touched on Wednesday.
- Trump said at the World Economic Forum in Davos that he had reached an agreement on a framework for a future deal on Greenland with NATO, ending the need to impose new tariffs on European nations.
- The development removes the tail risk of a US confrontation with NATO allies, triggering the reversal of the “Sell America” trade, which acts as a tailwind for the US Dollar and further undermines the bullion.
- US Special Envoy Steve Witkoff announced a new meeting with Russian President Vladimir Putin that’s set to take place on Thursday amid progress with discussions over a US-led 20-point Ukraine peace plan.
- Meanwhile, Trump said on Wednesday that Ukrainian President Volodymyr Zelensky and Putin were now at a point where they could reach a deal to end the war, further undermining the precious metal.
- According to a Reuters poll, a majority of economists expect that the US Federal Reserve will hold its key interest rate through the end of this quarter and possibly until Chair Jerome Powell's tenure ends in May.
- Traders, however, are still pricing in the possibility of two more rate reductions in 2026. Moreover, concerns about political interference in the Fed's independent setting of rates cap the USD upside.
- Hence, the release of the US Personal Consumption Expenditure (PCE) Price Index, along with the final US Q3 GDP report, due later today, will influence the USD price action and drive the XAU/USD pair.
Gold mixed technical setup warrants caution before positining for deeper losses
The 100-hour Simple Moving Average (SMA) continues to rise and lies beneath the price, supporting the near-term uptrend. The XAU/USD pair holds above this gauge, keeping the bias tilted higher, with the SMA at $4,707.80 acting as dynamic support. The Moving Average Convergence Divergence (MACD) line remains below the Signal line and below zero, while the negative histogram contracts, suggesting fading bearish momentum. The Relative Strength Index (RSI) stands at 46 (neutral) after cooling from prior extremes.
Measured from the $4,535.22 low to the $4,889.37 high, the 38.2% Fibonacci retracement at $4,754.08 offers initial support, while the 23.6% Fibo. level at $4,805.79 cushions dips; holding above these supports would keep the recovery path intact. Near-term, continued price acceptance above the rising 100-hour SMA keeps the path of least resistance to the upside. Momentum would firm if the MACD turns up through its Signal line and the RSI reclaims 50, while failure to hold above the average would leave the market vulnerable to a deeper pullback and extend consolidation.
(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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