Gold consolidates strong weekly gains to all-time peak; bullish potential intact

• Gold continues scaling new all-time highs for the fifth consecutive day on Friday.
• The move up seems rather unaffected by easing US-EU tensions over Greenland.
• Fed rate cut bets keep the USD depressed and offer support to the commodity.

Gold (XAU/USD) enters a bullish consolidation near the all-time peak set earlier this Friday and trades around the $4,950 area heading into the European session despite easing geopolitical tensions after US President Donald Trump’s U-turn on Greenland. In fact, Trump pulled back from his threat to slap next tariffs on eight European nations and ruled out seizing Greenland by force. This remains supportive of the upbeat market mood, which tends to undermine demand for traditional safe-haven assets, albeit it does little to dent the strong bullish sentiment surrounding the bullion.

Meanwhile, the US Dollar (USD) edges higher following the overnight slump back closer to a two-week low. This, in turn, is holding back bullish traders from placing fresh bets around the safe-haven Gold amid extremely overbought conditions on short-term charts. However, firming expectations for at least two more interest rate cuts by the US Federal Reserve (Fed) might keep a lid on the USD recovery and act as a tailwind for the non-yielding Gold. Moreover, the supportive fundamental backdrop suggests that the path of least resistance for the XAU/USD pair is to the upside.

Daily Digest Market Movers: Gold pauses for a breather amid positive risk tone, USD uptick

• US President Donald Trump pulled back from his tariff threats and said on Wednesday that he had reached an agreement on a framework for a future deal on Greenland with NATO. The relief spurred a follow-through rally on Wall Street, and the spillover effect buoyed Asian equities on Friday.
• The US Bureau of Economic Analysis published the final reading of third-quarter Gross Domestic Product, which showed that the economy expanded by 4.4%, slightly better than the second estimate of 4.3%. The reading was also well above the 3.8% growth recorded in the previous quarter.
• A separate report revealed that the US Core Personal Consumption Expenditures Price Index – the Federal Reserve’s preferred gauge of inflation – rose 2.8% YoY in November from 2.7% in the previous month. On a monthly basis, the gauge maintained a steady growth and recorded a 0.2% increase.
• Adding to this, the US Department of Labor reported that initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 200,000 for the week ended January 17. The print was lower than consensus estimates for a reading of 212K, though it failed to impress the US Dollar bulls.
• Investors seem convinced that the Fed will hold its key interest rate through the end of this quarter and possibly until Chair Jerome Powell’s tenure ends in May. The markets, however, are still pricing in the possibility of two more rate reductions in 2026, which continues to weigh on the USD.
• The USD Index, which tracks the Greenback against a basket of currencies, remains on track to register heavy weekly losses, reversing a major part of its gains since the beginning of 2026. This, in turn, continues to benefit the Gold and backs the case for an extension of the recent record-setting rally.
• The market focus now shifts to a two-day FOMC policy meeting, starting next Tuesday. Investors will look for cues about the Fed’s rate-cut path, which will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the non-yielding yellow metal.

Gold overbought daily RSI backs the case for some near-term consolidation

This week’s breakout through the top end of an ascending channel extending from late October was seen as a key trigger for the XAU/USD bulls and validates the near-term positive outlook. The Moving Average Convergence Divergence (MACD) line stands above the Signal line, with both above zero, and the positive histogram widens, suggesting strengthening bullish momentum. The RSI at 81.11 is overbought and could cap gains near term, even as the breakout favors upside continuation.

Momentum remains firm, but stretched conditions raise the risk of a pullback toward the channel floor at $4,437.46 should buyers fade. The MACD stays in positive territory and above the Signal line; a contracting histogram would hint at waning momentum and a corrective phase. RSI holds above 70, reinforcing an overbought profile that could trigger a pause before the broader uptrend resumes as long as price holds above former channel resistance.

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