Gold Price Forecast: XAU/USD Surges 65% in 2025, Eyes $4,400 as Fed Cuts Shape 2026 Outlook
Gold opened 2026 on firm footing. During early European trading on Friday, XAU/USD traded near $4,378, extending a rally...
Quick overview
- Gold started 2026 strong, trading near $4,378 after a nearly 65% gain in 2025, its best performance since 1979.
- The Federal Reserve's recent rate cut and expectations for further easing have made gold an attractive asset amid a cooling inflation environment.
- Geopolitical tensions have bolstered safe-haven demand for gold, leading to consistent inflows and price stability near record highs.
- Technical indicators suggest a constructive trend for gold, with key support levels around $4,350 and resistance at $4,400.
Gold opened 2026 on firm footing. During early European trading on Friday, XAU/USD traded near $4,378, extending a rally that delivered a near-65% gain in 2025, its strongest annual performance since 1979.
The move reflects more than momentum. Investors are positioning for a softer US monetary backdrop in 2026 while maintaining exposure to assets that historically preserve value during uncertain periods. As inflation cools and growth signals remain mixed, gold has reasserted itself as a strategic hedge rather than a short-term trade.
Fed Rate Cuts Keep Gold Supported
Monetary policy remains the backbone of gold’s advance. The Federal Reserve’s 25-basis-point rate cut in December, which lowered the policy range to 3.50%–3.75%, reinforced expectations that borrowing costs could fall further next year.
FOMC minutes showed most policymakers still see scope for additional easing if inflation continues to moderate. While internal disagreements persist, the broader message is that restrictive policy is no longer the default stance.
Lower interest rates reduce the opportunity cost of holding non-yielding assets, keeping gold attractive even at elevated price levels.
Geopolitics Reinforce Safe-Haven Demand
Geopolitical risk has added a steady layer of support. Ongoing Middle East tensions, alongside renewed US–Venezuela friction, have kept risk sentiment fragile.
Rather than driving speculative spikes, these risks have encouraged consistent inflows into gold, helping prices remain close to record highs despite intermittent pullbacks.
Gold Technical Picture: Trend Still Intact
From a technical perspective, gold’s structure remains constructive. On the 4-hour chart, price is holding within a rising channel, guided by an ascending trendline from early December. The latest pullback found support near $4,320–$4,330, aligning closely with the 38.2% Fibonacci retracement of the recent rally.
Candlestick patterns around that zone show long lower wicks, indicating rejection of lower prices rather than aggressive selling. Gold has reclaimed its short-term moving averages, with the 50-period MA near $4,350 acting as dynamic support, while the 200-period MA continues to slope higher below.
On momentum, RSI has recovered toward the 50 level, signaling stabilization after the correction without entering overbought territory.
- Immediate resistance: $4,400, then $4,475
- Major resistance: $4,549 (recent high)
- Key support: $4,350, followed by $4,300
Profit-Taking and Data Risks Ahead
Near-term risks remain. After such a strong rally, profit-taking is a natural headwind, especially as the CME’s higher margin requirements raise the cost of leveraged positions.
Attention now turns to US data, particularly the final Manufacturing PMI (51.8 expected). Strong data could support the dollar and slow gold’s advance, while a softer reading may revive rate-cut bets and keep gold bid.
For now, the trend favors buyers, but patience may be required at higher levels.
Trade idea: Buy pullbacks near $4,350, target $4,450, stop below $4,300.
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