Is gold "playing dead" at its high levels? Why isn't it breaking down? What big move is it holding back?
2026-01-16 19:29:54
On Friday (January 16), spot gold traded around $4,600 during the European session, currently in a narrow range near its historical highs. While the previous uptrend remains intact on the daily chart, with prices consistently moving within an upward channel, recent price action has become hesitant: rallies followed by pullbacks, then rapid rebounds driven by buying pressure, exhibiting a typical tug-of-war pattern. The market is like a car with the accelerator pressed but the gear engaged – the power is still there, but the forward momentum has been paused.
The core reason for this stalemate lies in the significant divergence in macroeconomic signals. Gold pricing logic primarily revolves around real interest rate expectations, the strength of the US dollar, and safe-haven sentiment, but recently these factors have been conflicting. On the one hand, softer-than-expected inflation data, with core inflation below expectations, led the market to anticipate a possible earlier-than-expected shift to easing by the Federal Reserve, providing support for gold. On the other hand, the latest initial jobless claims fell to 198,000, far better than the expected 215,000, indicating a still-strong US labor market. Stronger employment data suggests a potential extension of the interest rate hike cycle and a longer period of high interest rates, which would push up real interest rates and the attractiveness of the US dollar, conversely suppressing gold, which does not generate interest.
Against this backdrop, the policy path has become ambiguous, and policymakers have repeatedly emphasized "data dependence," making it difficult for traders to form a unified expectation. The result is a high-frequency, oscillating pattern of "selling gold when the data is good and buying gold when the data is bad." Analysts believe that the current market's bullish and bearish divergence has reached a critical point, and only a catalyst is needed to break the balance.
The US dollar and real interest rates are currently the main forces suppressing gold's upward movement. With strong employment data, the dollar index rebounded to a multi-week high, further increasing the opportunity cost of holding gold. Theoretically, a stronger dollar and rising real interest rates should reduce the attractiveness of gold, which is a key reason why gold prices failed to break through the $4642.77 high.
However, gold did not experience a deep correction; instead, it showed strong resilience around $4,600, indicating that other forces were supporting it. The most crucial factor in this is the continued market demand for a medium-term risk premium. When policy prospects are uncertain and global geopolitical tensions are high, gold's role as the ultimate safe-haven asset becomes prominent. Recent fluctuations in the Middle East have triggered a surge of short-term funds into the gold market with each escalation of tensions, driving prices up rapidly; conversely, once the situation eases and safe-haven demand cools, gold prices briefly decline. This "news-driven" volatility complicates trading and discourages investors from chasing highs or taking large short positions.
Furthermore, the market is closely watching the US Supreme Court's ruling on tariff-related matters. This seemingly distant event could actually impact future inflation and economic growth expectations. If the ruling reduces uncertainty surrounding trade policy, market concerns about stagflation may ease, leading to decreased safe-haven demand and putting short-term pressure on gold. Conversely, if uncertainty persists or even intensifies, gold's hedging value will be further strengthened. It can be said that currently, not only are economic data influencing gold prices, but even minor developments in the judicial system could become the trigger for market movements.
From a technical chart perspective, gold remains in a healthy uptrend. On the daily chart, the price is within an ascending channel, with the previous high of $4642.77 acting as short-term resistance, while $4500.00 is a key psychological support level. If the price retraces to this area, the market will be closely watching for strong buying support.
The indicators also provide important clues. The current MACD DIFF is 92.77, DEA is 82.59, and the MACD histogram is 20.35, all still running above the zero axis, indicating that the medium-term bullish pattern has not been broken. However, it is worth noting that the MACD histogram has not continued to expand, indicating that the upward momentum has slowed down compared to the previous period. The RSI (14) reading is about 67.74, which is in the strong range but has not entered the overbought state, which is consistent with the characteristics of "strong consolidation rather than accelerated rise".
In summary, the current technical pattern resembles a phase of consolidation and turnover within an uptrend, rather than a signal of a trend reversal. The market is accumulating energy, awaiting a breakout. The true directional choice is likely to occur after the release of key data or the conclusion of a major event.
If subsequent data shows continued cooling of inflation, the Federal Reserve releases dovish signals leading to a decline in real interest rate expectations and a weakening dollar, while geopolitical risks remain unresolved, then gold is likely to retest the previous high of $4642.77 and attempt to reach the potential target area around $4700. However, it should be noted that if the price fails to hold after breaking through and quickly falls back into the range, it may be a false breakout, and a bull trap should be anticipated.
If economic data remains strong and the market reprices to a scenario of "higher interest rates for longer," coupled with a decline in risk aversion, gold prices may continue to face pressure around $4,600, potentially pulling back to test the $4,500 support level. However, this does not necessarily signify the end of the bull market; it is more likely a technical correction of the previous gains. The key lies in whether a structural low emerges during the pullback.
The core reason for this stalemate lies in the significant divergence in macroeconomic signals. Gold pricing logic primarily revolves around real interest rate expectations, the strength of the US dollar, and safe-haven sentiment, but recently these factors have been conflicting. On the one hand, softer-than-expected inflation data, with core inflation below expectations, led the market to anticipate a possible earlier-than-expected shift to easing by the Federal Reserve, providing support for gold. On the other hand, the latest initial jobless claims fell to 198,000, far better than the expected 215,000, indicating a still-strong US labor market. Stronger employment data suggests a potential extension of the interest rate hike cycle and a longer period of high interest rates, which would push up real interest rates and the attractiveness of the US dollar, conversely suppressing gold, which does not generate interest.
Against this backdrop, the policy path has become ambiguous, and policymakers have repeatedly emphasized "data dependence," making it difficult for traders to form a unified expectation. The result is a high-frequency, oscillating pattern of "selling gold when the data is good and buying gold when the data is bad." Analysts believe that the current market's bullish and bearish divergence has reached a critical point, and only a catalyst is needed to break the balance.
US Dollar, Interest Rates, and Geopolitical Risks: A Three-Way Battle
The US dollar and real interest rates are currently the main forces suppressing gold's upward movement. With strong employment data, the dollar index rebounded to a multi-week high, further increasing the opportunity cost of holding gold. Theoretically, a stronger dollar and rising real interest rates should reduce the attractiveness of gold, which is a key reason why gold prices failed to break through the $4642.77 high.
However, gold did not experience a deep correction; instead, it showed strong resilience around $4,600, indicating that other forces were supporting it. The most crucial factor in this is the continued market demand for a medium-term risk premium. When policy prospects are uncertain and global geopolitical tensions are high, gold's role as the ultimate safe-haven asset becomes prominent. Recent fluctuations in the Middle East have triggered a surge of short-term funds into the gold market with each escalation of tensions, driving prices up rapidly; conversely, once the situation eases and safe-haven demand cools, gold prices briefly decline. This "news-driven" volatility complicates trading and discourages investors from chasing highs or taking large short positions.
Furthermore, the market is closely watching the US Supreme Court's ruling on tariff-related matters. This seemingly distant event could actually impact future inflation and economic growth expectations. If the ruling reduces uncertainty surrounding trade policy, market concerns about stagflation may ease, leading to decreased safe-haven demand and putting short-term pressure on gold. Conversely, if uncertainty persists or even intensifies, gold's hedging value will be further strengthened. It can be said that currently, not only are economic data influencing gold prices, but even minor developments in the judicial system could become the trigger for market movements.
Technical analysis reveals a hidden message: the upward trend is not over, but momentum is weakening.
From a technical chart perspective, gold remains in a healthy uptrend. On the daily chart, the price is within an ascending channel, with the previous high of $4642.77 acting as short-term resistance, while $4500.00 is a key psychological support level. If the price retraces to this area, the market will be closely watching for strong buying support.
The indicators also provide important clues. The current MACD DIFF is 92.77, DEA is 82.59, and the MACD histogram is 20.35, all still running above the zero axis, indicating that the medium-term bullish pattern has not been broken. However, it is worth noting that the MACD histogram has not continued to expand, indicating that the upward momentum has slowed down compared to the previous period. The RSI (14) reading is about 67.74, which is in the strong range but has not entered the overbought state, which is consistent with the characteristics of "strong consolidation rather than accelerated rise".
In summary, the current technical pattern resembles a phase of consolidation and turnover within an uptrend, rather than a signal of a trend reversal. The market is accumulating energy, awaiting a breakout. The true directional choice is likely to occur after the release of key data or the conclusion of a major event.
What's next for the market? Two different scenarios are unfolding.
If subsequent data shows continued cooling of inflation, the Federal Reserve releases dovish signals leading to a decline in real interest rate expectations and a weakening dollar, while geopolitical risks remain unresolved, then gold is likely to retest the previous high of $4642.77 and attempt to reach the potential target area around $4700. However, it should be noted that if the price fails to hold after breaking through and quickly falls back into the range, it may be a false breakout, and a bull trap should be anticipated.
If economic data remains strong and the market reprices to a scenario of "higher interest rates for longer," coupled with a decline in risk aversion, gold prices may continue to face pressure around $4,600, potentially pulling back to test the $4,500 support level. However, this does not necessarily signify the end of the bull market; it is more likely a technical correction of the previous gains. The key lies in whether a structural low emerges during the pullback.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
