Gold Surges Past $5,000 as Bull Market Accelerates
Gold has entered uncharted territory. At the opening of trading on Monday, 26 January, XAU/USD gapped higher and broke through the key $5,000 psychological level. Buying pressure remained intense throughout the session, driving prices close to $5,100.
The rally across precious metals has been broad-based: gold is now up around 18% year-to-date, while silver has posted an even more dramatic rise of nearly 50%.
What Is Driving Gold Higher?
The current surge is underpinned by a powerful mix of US dollar weakness and rising demand for safe-haven assets, fuelled by several structural and geopolitical factors:
→ Greenland-related tensions: renewed efforts by the Trump administration to pursue control over Greenland have escalated into friction with the EU, reviving fears of a potential trade conflict.
→ Increasing unease over political influence on the Federal Reserve, particularly amid signals that the US President favours lower interest rates, raising questions about the durability of US monetary policy independence.
→ Sustained central bank buying, tougher rhetoric from the White House towards Canada following its trade arrangements with China, and persistent geopolitical strains involving Iran.
Together, these factors are reinforcing an exceptionally strong bullish environment. Against this backdrop, the prospect of a meaningful decline in gold prices appears increasingly remote.
XAU/USD: Technical Perspective
In our analysis on 20 January, we:
→ outlined a rising price channel;
→ identified clear signs of overbought conditions;
→ maintained a constructive outlook, noting that any corrective moves were likely to be shallow and contained within the structure of the ascending channel.
Subsequent price action has gone well beyond expectations:
→ after becoming overbought near the channel’s upper boundary, gold saw only a brief and limited pullback;
→ buyers re-entered aggressively near the internal support line dividing the upper half of the channel, before forcing a decisive break above the channel top.
The sharper slope of the newly formed green trendlines highlights the accelerated and speculative nature of demand.
From a technical standpoint, XAU/USD is now extremely overextended, with RSI readings confirming overbought conditions. This raises the likelihood of a corrective phase — potentially towards the $5,000 level or the bullish gap zone near $4,900.
That said, given the exceptionally strong fundamental drivers, adjusting the broader outlook may be premature. A genuine trend reversal would require major and disruptive catalysts, which are not currently in sight.
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