Gold Near Record Highs as Geopolitical Risks and Fed Policy Shape Market Trends

Gold (XAU) prices continue trading near record levels as geopolitical uncertainty supports safe-haven demand. Talks between US and Russian officials in Riyadh have fueled speculation about a potential peace deal for Ukraine. However, uncertainty remains as Russia insists that Ukraine must stay out of NATO. Investors closely monitor developments, as any signs of de-escalation could reduce gold’s appeal. Meanwhile, Goldman Sachs has raised its year-end gold target to $3,100, citing strong central bank buying and increasing inflows into gold-backed ETFs. Rising gold demand and ongoing geopolitical risks are keeping prices elevated.

On the other hand, the US Dollar Index (DXY) remains under pressure as the Federal Reserve signals a cautious stance on monetary policy. Philadelphia Fed President Patrick Harker suggested keeping rates unchanged, arguing that inflation data does not fully reflect current economic shifts. Moreover, gold shipments from Singapore to the US surged in January, reflecting growing demand for bullion amid market volatility. A 27% shipment increase highlights pricing disparities across key markets, reinforcing gold’s role as a hedge against economic instability. Meanwhile, discussions on security guarantees for Ukraine could influence risk sentiment. If a peace deal materializes, gold may face selling pressure as investors shift towards riskier assets. However, prolonged negotiations and economic concerns could sustain demand for gold, keeping prices supported.

The market expects the release of January’s FOMC monetary policy decision, alongside housing data and weekly initial jobless claims, which will impact the next move in gold.

Gold (XAU) Technical Analysis

Gold Daily Chart – Bullish Consolidation at Record Levels

The daily chart for gold shows strong price consolidation between $2,940 and $2,880. This consolidation strengthens the gold price outlook and produces bullish patterns. The chart also indicates that the price establishes this consolidation at overbought levels, as seen in the RSI. Therefore, if the price fails to break above $2,940, a correction may develop toward the $2,795 region. However, a break above $2,940 will open the door for a move toward the $3,000 zone.

Gold 4-Hour Chart – Bullish Consolidation

The 4-hour chart for gold shows that the price is consolidating at higher levels, indicating strength. A break above $2,940 will confirm the continuation of the bullish trend. However, a break below $2,880 may signal a further decline toward $2,795.

Treasury Yields (TNX) Technical Analysis

10-Year Treasury Note Yield Daily Chart – Inverted Head and Shoulders

The daily chart for 10-year Treasury yields shows an inverted head and shoulders pattern. This pattern indicates a bullish price structure, and a break above 4.70% will confirm a move toward 5%. Additionally, a break above the 1-year trendline will keep the bullish trend intact, with a target of 5%.

10-Year Treasury Note Yield 4-Hour Chart – Ascending Channel Pattern

The 4-hour chart for 10-year Treasury yields shows the formation of an ascending channel, with yields consolidating around the channel’s support. A break below 4.45% will invalidate the ascending channel and induce downward pressure. However, if US Treasury yields continue above 4.65%, they are likely to advance toward 5%, which is defined by the ascending channel’s resistance.

US Dollar (DXY) Technical Analysis

UD Dollar Daily – Volatile Zone Amid Fed Policy

The daily chart for the US Dollar Index (DXY) shows that the index rebounds toward the 107 level after breaking below it. If the 107 level holds as resistance, the US Dollar could decline to 105.60. The RSI suggests that the Dollar Index may drop further before a meaningful rebound occurs.

US Dollar 4-Hour Chart – Ascending Broadening Wedge

The ascending broadening wedge pattern further shows the bearish pressure on the US Dollar. Specifically, this pattern indicates that the breakout from 107 occurred at the green trendline, which has been retested, with the price showing weakness around this level. Therefore, a break below 106.60 will confirm the continuation of the downward trend.