Gold Price Forecast: XAU/USD re-attempts $5,200 amid tariffs and geopolitical woes

Gold buyers are back in the game early Wednesday after seeing a correction from monthly highs on Tuesday.
The US Dollar slips after Trump’s SOTU fails to impress and as AI-driven worries ease. Dovish Fed bets also weigh.
Gold looks north so long as the key 61.8% Fibo resistance at $5,142 holds on the daily chart.

Dhwani Mehta FXStreet

Gold is gathering pace to regain the $5,200 level early Wednesday, as buyers fight back control amid a broadly weaker US Dollar (USD) and looming trade and geopolitical risks.

Gold: Fundamentals favor further upside

Gold is staging a modest comeback in Asian trading this Wednesday, helped by a broad-based US Dollar retreat. The Greenback corrects from near monthly highs against its major currency peers amid persistent dovish bets surrounding the US Federal Reserve (Fed) and a risk-on market environment, following President Trump’s State of the Union (SOTU) speech.

Trump delivered his first SOTU of the second term before a joint session of Congress, addressing tariffs and Iran nuclear concerns. His comments kept the USD under pressure, while allowing Gold to resume its recent uptrend.

Trump accused Iran of advancing missile capabilities, while on tariffs, the President said the US Supreme Court ruling on tariffs was 'unfortunate'.

Meanwhile, Asian stocks are on the rise, following their Wall Street counterparts, as investors took to profit-taking ahead of the fourth-quarter earnings report from the leading global chipmaker Nvidia Corp due after-market hours on Wednesday.

On the geopolitical spectrum, traders remain wary and prefer to hold the traditional store of value, Gold, heading into more US-Iran nuclear talks in Geneva scheduled for Thursday.

That being said, Gold will likely remain underpinned in the sessions ahead, with eyes on speeches from Fed officials and broader market sentiment following Nvidia earnings.

Gold price technical analysis: Daily chart

The near-term bias is mildly bullish as price holds above the 21-day and 50-day Simple Moving Averages (SMAs), while the 100- and 200-day SMAs extend higher and confirm a broader uptrend. The latest Relative Strength Index (RSI) reading around 59 stays above the neutral 50 line, pointing to sustained, but not stretched, upside momentum after the recent consolidation off the highs.

Immediate support emerges near the 50.0% Fibonacci retracement of the latest upswing, measured from $4,401.99 to $5,597.89, at $4,999.94, reinforced by the rising 21-day SMA just above $5,020. A break below this area would expose the 38.2% retracement at $4,858.82 as the next downside level. On the upside, initial resistance aligns with the 61.8% retracement at $5,141.05, with a daily close above it opening the path toward the $5,340 zone, where the 78.6% retracement at $5,341.96 caps the next bullish objective.

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

Gold FAQs

Why do people invest in Gold?

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.

Who buys the most Gold?

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.

How is Gold correlated with other assets?

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.

What does the price of Gold depend on?

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.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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