Last Updated on January 21, 2026 by Deon
Technically, the momentum is still in favor of bulls. The MACD is still firmly in the positive zone and has been strengthening over recent sessions. This confirms that there are growing pressures to the upside. The RSI at 72 indicates overbought condition, which suggests that gold could pause, or even consolidate, in the short-term, despite the strong trend.
If prices drop, buyers will likely step in around $4,400. This is the channel support. As long as the gold price continues to form higher lows, and momentum indicators remain above neutral levels – RSI above 50 in particular – then the broader bullish pattern remains intact.
The renewed trade tensions have returned to the forefront after US President Donald Trump announced additional tariffs against European allies. This prompted the EU consider retaliatory actions ahead of an upcoming deadline on February 1. The renewed trade tensions have rekindled fears of a wider trade war and pushed investors back to traditional safe-havens such as gold.
Geopolitical tensions are fueling the rally. The increased drone and missile strikes by Russia on Ukraine have raised fears about energy security in winter. The unrest in Iran is lessening, reducing the likelihood of US involvement. However, the ongoing conflict in Ukraine continues to drive demand for gold.
The US dollar is also slipping for the second session in a row, and has fallen from its highest level since December 1. Gold prices are typically boosted by a weaker dollar, which helps push the metal towards the $4,700 range.
Trump’s tariff talk has also revived the “Sell America”, a larger trade. This is weighing down the dollar, despite the expectation that the Federal Reserve will not be cutting rates as aggressively. Commentaries suggesting that Trump’s economic staff will remain the same, and uncertainty about who will succeed Fed chair Jerome Powell have led traders to reduce expectations for rate reductions in 2026.
Investors are still cautious. Many investors are waiting to see key US data this week. Especially the PCE inflation and final GDP numbers, which can shape expectations about Fed policy. Gold remains a popular non-yielding investment that is well supported until then.
Gold’s rally has been driven by a powerful combination of technical strength and geopolitical risks, trade tensions and a cooling US Dollar. Although a short-term consolidation may be possible due to the overbought condition, the overall trend is bullish so long as global uncertainties remain high.