Gold Price Forecast: Can XAU/USD Reclaim $5,000 After the $15 Trillion “Warsh Shock”?
Gold is showing its strength as XAU/USD steadies around $4,921 after a dramatic week where prices dropped from record...
Quick overview
- Gold prices have stabilized around $4,921 after a significant drop from record highs near $5,600.
- The nomination of Kevin Warsh to lead the Fed initially caused market volatility, but expectations for rate cuts remain intact.
- Geopolitical tensions are easing with US-Iran talks, reducing the immediate demand for gold as a safe haven.
- Technical indicators suggest gold is recovering, with strong support at $4,720 and potential resistance at $4,970.
Gold is showing its strength as XAU/USD steadies around $4,921 after a dramatic week where prices dropped from record highs near $5,600.
Kevin Warsh’s nomination to lead the Fed initially unsettled safe-haven assets, but markets are now calming down.
Traders are considering a weaker labor market and recent diplomatic progress alongside a stronger US Dollar. This could set up a return to the $5,000 level.
The “Warsh Effect” and Fed Policy Pivot
The main reason for the recent volatility was the unexpected nomination of Kevin Warsh as the next Federal Reserve Chair. Markets first saw this as a sign the Fed would take a tougher stance on inflation and slow down rate cuts.
However, President Trump has since clarified that he still expects the Fed to lower rates to support economic growth, easing earlier concerns.
- Fed Expectations: Despite the nomination, markets are still pricing in at least two more rate cuts in 2026.
- Labor Market Weakness: The January ADP report showed a measly 22,000 new jobs, less than half of the expected 48,000, reinforcing the need for a dovish tilt.
- Services Strength: A steady ISM Services PMI at 53.8 provides a floor for the economy, preventing a total bearish collapse.
Geopolitics: Oman Talks Soften Safe-Haven Demand
A drop in the geopolitical risk premium has also weighed on gold prices. News of direct talks between the US and Iran in Oman this Friday suggests tensions in the Middle East may be easing.
For investors, this lessens the immediate need to buy gold as a safe haven, which has contributed to recent lows around $4,790. Even though a breakthrough is not certain, ongoing diplomacy is temporarily limiting XAU/USD’s upward movement.
Gold Technical Analysis: Testing the $4,860 Floor
From a technical perspective, gold is recovering. The recent drop tested the 200-EMA at $4,720, which held as strong support. Now, prices are bouncing and facing the 0.382 Fibonacci retracement level at $4,864, which has shifted from resistance to support.
Market Snapshot
- Price Action: Currently trading near $4,921, testing short-term recovery levels.
- Immediate Resistance: The 50-day EMA at $4,970 remains the gateway to a $5,000 retest.
- Momentum Shift: The RSI (14) has reset to 47, signaling that the “overbought” bubble has officially burst.
- Downside Protection: Strong buy-side interest remains anchored at $4,690 (0.236 Fibo level).
Conclusion: Is the Gold Rush Over or Just on Sale?
While the record-shattering rally toward $5,600 has paused, the fundamental pillars supporting gold—central bank demand and a cooling US economy- remain firmly in place.
The recent “meltdown” appears to be a necessary flushing of an overcrowded trade rather than a change in long-term trend. If gold can sustain its position above $4,900 through the Oman talks and upcoming JOLTS data, the path to $5,150 remains wide open.
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