Gold sets new highs, with further gains ahead

Gold prices rose above 4,622 USD per ounce on Wednesday, challenging previous record levels. The rally is underpinned by growing expectations of US interest rate cuts this year and heightened demand for defensive assets.

December data pointed to a moderation in core US inflation, confirming a gradual easing of price pressures and clarifying the economic picture following earlier disruptions.

In this environment, interest rate futures reflect a divergence in expectations: investors are pricing in two to three rate cuts from the Federal Reserve in 2025, exceeding the median forecast from policymakers themselves, which signals only one reduction.

Safe-haven demand has also been reinforced by concerns over the Fed’s independence following the launch of a criminal investigation related to Chair Jerome Powell’s congressional testimony in June.

Geopolitical tensions remain elevated, with markets closely monitoring the risk of US involvement in political instability in Iran amid recurring warnings of potential military action.

Technical analysis: XAU/USD

Four-hour chart

On the H4 chart, XAU/USD is consolidating around 4,623 USD. An upward expansion of this range towards 4,770 USD is anticipated, likely to be followed by a corrective pullback towards 4,620 USD. A break below this level would open the door to a deeper correction towards 4,520 USD.

The MACD indicator supports the bullish outlook, with its signal line turning upward and pressing towards new highs, indicating sustained upward momentum.

One-hour chart

On the H1 chart, the market has formed a consolidation range around 4,629 USD and is now building the next leg higher, targeting at least 4,770 USD. This structure reinforces the broader uptrend.

The Stochastic oscillator aligns with this view, as its signal line is positioned at 80 and continues to point upward, signalling strong near-term bullish momentum.

Conclusion

Gold continues to draw strength from shifting rate expectations, political uncertainty, and persistent geopolitical risks. While the near-term technical structure suggests potential for further gains towards 4,770 USD, traders should remain mindful of overextended conditions and the likelihood of a corrective pullback thereafter. A sustained move above current levels would reinforce the longer-term bullish narrative, while a break below 4,620 USD could signal a deeper retracement before the next leg higher.