Gold Price Forecast: XAU/USD nears $5,000 on lingering political woes

XAU/USD Current price: $4,955

• A partial US government shutdown interrupts the release of employment data.
• US President Donald Trump announced a trade deal with India, reducing tariffs.
• XAU/USD aims to resume its haven rally, $5,000 under assault.

Spot Gold managed to recover ground after falling sharply for two days in a row, trading well above the $4,900 mark in the American session on Tuesday. The US Dollar (USD) lost its recent momentum, although losses against other currencies are limited.

Market participants paused their early optimism amid fresh waves of uncertainty. On the one hand, the United States (US) Bureau of Labor Statistics (BLS) announced on Monday that it will not be publishing the usual employment reports given the US government's partial shutdown. That means the BLS skipped publishing the JOLTS Job Openings report and will not release weekly employment figures or the January Nonfarm Payrolls (NFP) report on Friday.

On the other hand, trade tensions returned. The European Union signed a trade deal with India last week, prompting US President Donald Trump to announce a trade agreement with the Asian country. The new deal includes reduced tariffs from 25% to 18%, and India's oil purchases to both the US and Venezuela, the latter in the hands of Trump.

Finally, market participants seem to be taking back bets that the upcoming US Federal Reserve (Fed) Chair, Kevin Warsh, will be utterly hawkish, as Trump demands. Indeed, Warsh has advocated for lower rates in the last few months, arguing that tech progress will boost growth without triggering worrisome inflation.

Ultimately, concerns remain the same, resulting in increased haven demand.

XAU/USD short-term technical outlook

From a technical point of view, the 4-hour chart for the XAU/USD pair shows it recovered above all its moving averages, currently struggling around a 20-period Simple Moving Average (SMA), the latter at $4,922. The 100-period and 200-period SMAs head modestly higher at $4,869 and $4,649, respectively. At the same time, the Momentum indicator resumed its advance but remains right below its midline, while the Relative Strength Index (RSI) indicator hovers at around 50, neutral, not enough to confirm another leg north.

In the daily chart, XAU/USD seems poised to extend its current recovery. The pair surged above all its moving averages, with the 20-day SMA climbing above the longer ones and currently at $4,802.57. At the same time, the technical indicators have bounced from around their midlines, with the RSI indicator currently at 56 and aiming north. A sustained advance pushing Gold through $5,000 is likely to anticipate a steeper upside extension.

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