Amidst escalating geopolitical tensions, including potential U.S. military involvement in Venezuela, former President Trump's threats of military action concerning Iran's unrest, the ongoing Russia-Ukraine conflict, and the White House's persistent interest in acquiring Greenland, market sentiment remains fragile. These factors continue to erode global risk appetite, channeling safe-haven flows into the precious metals market. During the Asian and European trading sessions on Monday, spot gold oscillated higher, extending gains from the previous two trading days. It touched a historic peak of $4,600.89 per ounce intraday and was last trading around $4,575, marking an approximate gain of 1.45% for the day.
Concurrently, concerns regarding the Federal Reserve's independence weighed on the U.S. dollar, causing it to retreat from a one-month high of 99.27 reached in the prior session. This dynamic served as another key factor bolstering the appeal of non-yielding assets like gold. However, stronger-than-expected U.S. employment data released on Friday tempered market expectations for aggressive monetary policy easing in 2026, potentially capping further upward momentum for gold. Market participants are now awaiting the U.S. Consumer Price Index (CPI) data scheduled for release on Tuesday, seeking clearer direction for gold prices. The combination of safe-haven demand and Federal Reserve-related anxieties continues to underpin gold prices. Following U.S. strikes on Venezuela earlier in January, former President Trump stated that Washington would temporarily assume control of the Venezuelan administration to oversee its transition. Furthermore, Trump declared himself the acting president of Venezuela in a post on his social media platform. A report from The Wall Street Journal, citing anonymous U.S. officials, indicated that Trump was considering punitive measures against Iran for its crackdown on widespread anti-government protests, which have reportedly resulted in over 500 fatalities. This development, alongside the intensifying Russia-Ukraine conflict, keeps geopolitical risks elevated. Indeed, a drone attack attributed to Ukraine on Saturday triggered a fire at an oil storage facility in Russia's Volgograd region. In a separate incident, Russia reportedly utilized its "Oreshnik" hypersonic medium-range ballistic missile during nighttime strikes on the Lviv region, which is near the borders of the EU and NATO. Meanwhile, Federal Reserve Chair Jerome Powell addressed threats of criminal charges against him, stating they stem from the Fed's practice of setting interest rates based on assessments deemed most beneficial for the public, rather than adhering to presidential preferences. Powell added that the findings of an investigation would influence the central bank's future policy decisions. Following the U.S. jobs report on Friday, which showed the unemployment rate dropping to 4.4% in December from 4.6%, traders scaled back their bets on additional interest rate cuts in 2026. Against the backdrop of heightened concerns over Fed independence, the robust Non-Farm Payrolls data may not have significantly impacted dollar bulls. Looking ahead, with no major U.S. economic data releases scheduled for Monday, the trajectory of the dollar and precious metals will likely be influenced by commentary from influential FOMC members. Nevertheless, market focus remains squarely on the upcoming U.S. inflation data this week. From a technical perspective, gold's rally over the past month has progressed within an upward-sloping channel. This pattern suggests a well-established short-term uptrend, favoring bullish sentiment. Moreover, prices are holding firmly above the rising 200-period Simple Moving Average (SMA) at $4,310.07, reinforcing the positive trend and providing dynamic support. The Moving Average Convergence Divergence (MACD) indicator remains above its signal line and in positive territory, while expanding histogram bars indicate strengthening bullish momentum. The Relative Strength Index (RSI) is near 75, having entered overbought territory. This condition might restrain further short-term gains and potentially trigger a period of consolidation near the channel's upper boundary. Should a pullback occur, support is anticipated around the channel's lower boundary near $4,365, with the ascending 200-period SMA providing a foundation for the overall bullish bias. Sustained trading above these support levels would keep the upward channel intact, while a decisive break above the channel's resistance could pave the way for a fresh leg higher.
As of 14:40 Beijing time, spot gold was trading at $4,572.48 per ounce.
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