Gold Price Forecast: XAU/USD corrects sharply lower, bulls retain control

XAU/USD Current price: $4,820

• US President Donald Trump's speech in Davos brought some near-term relief.
• The US calendar will offer some first-tier, yet old data on Thursday.
• XAU/USD retreated sharply from all-time highs as the mood improved.

Spot Gold neared $4,890 on Wednesday, clinching yet another record high, as investors continued to seek refuge amid escalating geopolitical tensions triggered by United States (US) President Donald Trump. Trump delivered a speech at the World Economic Forum (WEF) and covered multiple subjects, from the US economy to how the country leads the world across all fronts.

The US Dollar (USD), however, managed to recover some of the ground lost throughout the first half of the day early in the American session, as President Trump noted the US does not want to use excessive force to obtain Greenland. As a result, XAU/USD shed some $70 bucks from its top, and trades around the $4,820 mark.

Uncertainty, however, remains in the background as President Trump did not refrain from praising the positive effects of widespread tariffs on the US economy. It’s clearly a tool he is willing to continue using.

Thursday will bring first-tier US data, although the figures were delayed by the government shutdown the country suffered last October. The American calendar includes a revision of the Q3 Gross Domestic Product (GDP), with annualized growth expected to be confirmed at 4.3%.

The country will also release the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. The data scheduled for release corresponds to October and November, a bit too old to be actually relevant.

Inflation is a key economic indicator in most cases, as it helps shape the central bank’s decisions. In this particular case, however, investors would rather wait for the announcement of Chair Jerome Powell’s replacement before changing bets on what the Fed would or would not do this year.

XAU/USD short-term technical outlook

The near-term picture for XAU/USD shows the pair is correcting overbought conditions, but also that the risk remains skewed to the upside. The 20-period Simple Moving Average (SMA) rises above the 100- and 200-period SMAs, keeping the bullish alignment alive. All three SMAs trend higher, and the price holds above them, sustaining an upward bias. The 20 SMA at $4,724.08 offers initial dynamic support, with the 100 SMA at $4,530.83 as a secondary floor. At the same time, the Momentum indicator remains well above its midline, although it is heading lower. The Relative Strength Index (RSI) indicator does the same, currently standing at 69.

In the daily chart, however, XAU/USD retains its bullish bias. The pair develops above all its moving averages, while the 20-day SMA climbs above the longer ones. Meanwhile, the RSI indicator retains its bullish slope around 76, while the Momentum indicator barely decelerated its advance well into overbought territory. The corrective decline may find buyers at around $4,800, a psychological support, with the speed of the subsequent recovery directly linked to the market's sentiment.

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