Gold prices are just shy of $5,000, prompting investors to sell off US assets.
2026-01-24 01:29:02
On Friday (January 23), spot gold futures hit a new record high in early US trading, reaching $4,988.07, just shy of the much-watched $5,000 mark. Gold prices have surged this week, with geopolitical turmoil and declining confidence in US assets creating a "perfect storm" that has driven investors to flock to gold as a safe haven.
From Monday's sell-off to Friday's risk-averse rush
To understand the current trend in the gold market, we need to rewind to Monday. At that time, the US stock market experienced a sell-off due to news-driven factors, which quickly evolved into a full-blown shift towards traditional safe-haven assets, with gold undoubtedly being the biggest winner in this wave of safe-haven demand.
According to Reuters, multiple factors simultaneously impacted the market: the resurgence of trade war threats, diplomatic turmoil surrounding Greenland, and investor anxiety about holding U.S. Treasury bonds and other dollar-denominated assets. Gold prices benefited this week as people sought to hedge against these volatile risks.
Why is gold rising at present?
The reasons for the surge in gold prices are actually quite straightforward. A continued weakening of the US dollar makes gold cheaper for buyers outside the US, thus boosting demand. At the same time, traders are betting that the Federal Reserve will cut interest rates later this year. Since gold itself does not generate interest, a rate cut would reduce the opportunity cost of holding gold, supporting its price. Since the beginning of 2025, the Fed's dovish rhetoric has created a favorable environment for gold's rise.
Central banks around the world are ramping up their stimulus measures – the Davos event further fuels this trend.
Aside from short-term factors, central banks around the world, especially emerging market central banks, are actively reducing their exposure to US assets and increasing their gold holdings. Trump's comments about Greenland at Davos this week further accelerated this trend.
Goldman Sachs has just raised its 2026 gold price target to $5,400 per ounce, citing central bank gold purchases and continued gold buying by investors through ETFs.
Heading toward $5,000 or even higher
Entering Friday's trading session, the $5,000 target, once considered highly speculative, is now within reach. Moreover, judging from the current momentum, gold prices may not stop there, as the factors driving the price increase will not disappear overnight.
This surge is different from previous gold bull markets.
The charts also confirm this trend. Gold continues to make higher highs and higher lows, a typical upward trend. But what's different about this rally is that it's not primarily driven by inflation concerns or fears of currency devaluation, but rather by declining investor confidence in stocks, bonds, and even major currencies themselves.
As markets continue to adjust to fiscal pressures and rising uncertainty, gold's status as the ultimate safe-haven asset becomes more solidified, meaning there may still be room for further gains.
Traders hesitated below key psychological levels.
(Spot gold daily chart source: FX678)
Technical analysis shows that gold prices fluctuated on Friday, indicating widespread caution in the market below $5,000. Some traders seemed hesitant to act due to concerns that this important psychological level might be a temporary top.
This is understandable, as the daily chart pattern shows that the market is overbought as gold prices move away from the trend line (currently at $4655.79).
Even if gold prices pull back to near the trend line due to overbought conditions and profit-taking, the market is likely to see renewed buying interest given the strong short-term and long-term fundamentals.
From Monday's sell-off to Friday's risk-averse rush
To understand the current trend in the gold market, we need to rewind to Monday. At that time, the US stock market experienced a sell-off due to news-driven factors, which quickly evolved into a full-blown shift towards traditional safe-haven assets, with gold undoubtedly being the biggest winner in this wave of safe-haven demand.
According to Reuters, multiple factors simultaneously impacted the market: the resurgence of trade war threats, diplomatic turmoil surrounding Greenland, and investor anxiety about holding U.S. Treasury bonds and other dollar-denominated assets. Gold prices benefited this week as people sought to hedge against these volatile risks.
Why is gold rising at present?
The reasons for the surge in gold prices are actually quite straightforward. A continued weakening of the US dollar makes gold cheaper for buyers outside the US, thus boosting demand. At the same time, traders are betting that the Federal Reserve will cut interest rates later this year. Since gold itself does not generate interest, a rate cut would reduce the opportunity cost of holding gold, supporting its price. Since the beginning of 2025, the Fed's dovish rhetoric has created a favorable environment for gold's rise.
Central banks around the world are ramping up their stimulus measures – the Davos event further fuels this trend.
Aside from short-term factors, central banks around the world, especially emerging market central banks, are actively reducing their exposure to US assets and increasing their gold holdings. Trump's comments about Greenland at Davos this week further accelerated this trend.
Goldman Sachs has just raised its 2026 gold price target to $5,400 per ounce, citing central bank gold purchases and continued gold buying by investors through ETFs.
Heading toward $5,000 or even higher
Entering Friday's trading session, the $5,000 target, once considered highly speculative, is now within reach. Moreover, judging from the current momentum, gold prices may not stop there, as the factors driving the price increase will not disappear overnight.
This surge is different from previous gold bull markets.
The charts also confirm this trend. Gold continues to make higher highs and higher lows, a typical upward trend. But what's different about this rally is that it's not primarily driven by inflation concerns or fears of currency devaluation, but rather by declining investor confidence in stocks, bonds, and even major currencies themselves.
As markets continue to adjust to fiscal pressures and rising uncertainty, gold's status as the ultimate safe-haven asset becomes more solidified, meaning there may still be room for further gains.
Traders hesitated below key psychological levels.
(Spot gold daily chart source: FX678)
Technical analysis shows that gold prices fluctuated on Friday, indicating widespread caution in the market below $5,000. Some traders seemed hesitant to act due to concerns that this important psychological level might be a temporary top.
This is understandable, as the daily chart pattern shows that the market is overbought as gold prices move away from the trend line (currently at $4655.79).
Even if gold prices pull back to near the trend line due to overbought conditions and profit-taking, the market is likely to see renewed buying interest given the strong short-term and long-term fundamentals.
- 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.
