Gold Price Forecast: XAU/USD bulls retain control near record high amid dovish Fed bets

Gold (XAU/USD) prolongs its record-setting rally for the fifth straight day and climbs above the $4,950 level during the Asian session on Friday. Expectations for further policy easing by the US Federal Reserve (Fed) continue to drive flows towards the non-yielding yellow metal despite easing geopolitical tensions following US President Donald Trump's U-turn on Greenland. The momentum also seems rather unaffected by extremely overbought conditions on short-term charts, suggesting that the path of least resistance for the commodity remains to the upside.

Trump announced on Wednesday that he was canceling his planned tariff on US allies in Europe over US control of Greenland after he and the leader of NATO agreed to a framework for a future deal on Arctic security. Moreover, Trump ruled out seizing Greenland by force, boosting investors' appetite for riskier assets. The immediate market reaction, however, turns out to be short-lived amid dovish Fed bets, which overshadowed Thursday's US economic data and dragged the US Dollar (USD) back closer to its lowest level since January 6, touched earlier this week.

The US Bureau of Economic Analysis published the final reading of the third-quarter Gross Domestic Product, which showed that the economy expanded by 4.4%. The reading was slightly better than the second estimate of 4.3% and was also well above the 3.8% growth recorded in the previous quarter. A separate report revealed that the US Core Personal Consumption Expenditures (PCE) Price Index – the Fed's preferred inflation gauge – rose 2.8% YoY in November from 2.7% in the previous month. On a monthly basis, the gauge maintained a steady growth and climbed 0.2%.

Adding to this, the US Department of Labour reported that initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 200,000 for the week ended January 17. The print was lower than consensus estimates for a reading of 212K, though it did little to provide any respite to the USD bulls amid the broader de-dollarization trend. Traders now look forward to the release of the flash PMIs for cues about the health of the global economy, which might influence the risk sentiment and drive the Gold, which remains on track to register strong weekly gains.

XAU/USD daily chart

Technical Analysis:

An ascending channel from $3,805.69 underpins the uptrend, and the XAU/USD pair has broken above the upper boundary near $4,742.80. The Moving Average Convergence Divergence (MACD) holds well above zero and is rising, signaling strengthening bullish momentum. The Relative Strength Index (RSI) at 81.25 sits in overbought territory, which could cap near-term upside as momentum stretches.

However, a sustained hold above the channel top has already set the stage for an extension of the advance toward fresh highs. If the rally cools, initial support aligns with the ascending channel’s lower boundary at $4,437.79. Any flattening in MACD would suggest waning momentum from elevated levels, while an RSI pullback toward 70 would relieve extremes and stabilize trend conditions. Failure to maintain the breakout area would risk a return into the prior range, whereas continued momentum would keep buyers in control.

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