Gold struggles to make it through $5,100 amid USD uptick; bullish bias remains

Gold (XAU/USD) maintains its bid tone for the seventh straight day on Tuesday, though it seems to struggle to build on the momentum beyond the $5,100 mark and remains below the all-time peak through the first half of the European session. Global uncertainties stemming from US trade policies and geopolitical tensions, along with sustained central bank buying and strong retail demand, continue to offer support to the precious metal. Moreover, bets that the US Federal Reserve (Fed) would lower borrowing costs two more times in 2026 benefit the non-yielding yellow metal.

Meanwhile, the US Dollar (USD) edges higher amid some repositioning trade ahead of the highly anticipated two-day FOMC policy meeting, starting later today. This, along with a generally positive tone, acts as a headwind for the Gold. Traders also seem reluctant and opt to wait for more cues about the Fed's rate cut path, which will influence the USD and provide a fresh directional impetus to the non-yielding yellow metal. Nevertheless, the aforementioned supportive fundamental backdrop suggests that the path of least resistance for the bullion remains to the upside.

Daily Digest Market Movers: Gold remains close to record high amid safe-haven demand as Fed decision looms

• US President Donald Trump said on Saturday that he would impose a 100% tariff on Canada if it follows through on a trade deal with China. This follows Trump's Greenland tariff threat, though it was withdrawn later, and adds a layer of uncertainty.
• Moreover, heightened geopolitical risks stemming from the protracted Russia-Ukraine war continue to drive safe-haven flows. This, along with a bearish US Dollar and dovish Federal Reserve bets, pushes the Gold price higher for the seventh straight day.
• Policy shocks from the Trump administration have tarnished the US Dollar's reputation in global financial markets. Moreover, bets that the central bank would lower borrowing costs two more times this year dragged the USD to a four-month low on Monday.
• On the economic data front, the US Census Bureau reported on Monday that Durable Goods Orders rose 5.3% in November vs. expectations for a 0.5% growth. New orders excluding transportation increased 0.5%, while excluding defense it rose 6.6%.
• Meanwhile, Russia insisted that Ukraine must cede all of the Donbas region as part of any deal to end the war. Ukraine rejected the proposal outright as the US-brokered Russia-Ukraine peace talks in Abu Dhabi ended without a deal on Saturday.
• The USD bears, however, pause for a breather as the market focus remains glued to the outcome of a two-day FOMC meeting, due to be announced on Wednesday. Investors will look for more cues about the Fed's rate cut path, which will drive the USD.
• Hence, Fed Chair Jerome Powell's remarks during the post-meeting press conference might infuse volatility in the markets and influence the commodity amid sustained buying by central banks and record inflows into exchange-traded funds.
• In fact, the People's Bank of China (PBOC) extended its gold-buying spree for a fourteenth month in December, while the National Bank of Poland, Reserve Bank of India, and Central Bank of Brazil were active buyers in late 2025 and early 2026.
• Moreover, global demand for investments in gold through exchange-traded funds increased by 25% in 2025. Gold holdings rose to 4,025.4 tonnes from 3224.2 tonnes in 2024, and the total Assets Under Management in ETFs stood at $558.9 billion.

Gold bulls might await breakout through ascending channel before placing fresh bets

The overnight failure to break out through a short-term ascending channel and the subsequent pullback could be seen as the first sign of a possible bullish exhaustion. However, the emergence of fresh buying on Tuesday warrants some caution before confirming that the Gold price has topped out. Moreover, the ascending channel underpins the broader uptrend, with the lower boundary offering support near $4,971.48 as the XAU/USD pair holds mid-range. The Moving Average Convergence Divergence (MACD) histogram has flipped negative and is widening, indicating the MACD line has slipped below the Signal line around the zero level, and momentum is rolling over.

The Relative Strength Index (RSI) at 70.84 is overbought and easing, which could keep buyers cautious while the XAU/USD pair consolidates within the channel. On the topside, the channel’s upper boundary at $5,156.89 caps advances. A recovery in MACD toward a bullish crossover would be needed to reassert upside traction, while the elevated RSI argues for digestion before a sustained break. A 4-hour close above the cap would open the path to extend the uptrend, whereas failure to improve momentum would leave the bias vulnerable to further tests of the channel floor.

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