Gold retreats from its peak: Can the bullish trend withstand near-term pressures? – January 7, 2026

Daily Gold Movement: Slight Decline Amid US Cautiousness

Gold prices experienced a limited decline during Wednesday’s session, with spot gold falling approximately 0.7% to close at $4,466.19 per ounce, after approaching its highest levels in a weekly period. This decline coincided with stability in February 2026 gold futures, which decreased by 0.4% to $4,477.30 per ounce.

Behind this slight dip are two main factors: first, profit-taking after strong gains in previous days, and second, the strengthening of the US dollar in anticipation of key US economic data this week, especially the employment report.

Gold Maintains Momentum Despite Short-Term Volatility

Gold remains structurally strong, supported by solid fundamentals that remain intact. In 2025, the precious metal achieved extraordinary gains of 64%, marking its strongest annual performance since 1979. Gold reached a historic peak of $4,549.71 per ounce on December 26, benefiting from a wave of global monetary easing and increased investment demand.

This robust performance is reflected in market expectations of at least two US interest rate cuts in 2026, which enhances gold’s appeal as an investment tool yielding returns in a low-interest-rate environment.

US Dollar Imposes Temporary Pressure

The US dollar entered the week strongly, influenced by cautious sentiment ahead of key economic data, especially the non-farm payroll report. The dollar index hovers near its two-week high, reflecting a cautious bet that the Federal Reserve may not rush to cut rates if labor market data shows unexpected resilience.

This relative stability of the US currency creates tactical pressure on dollar-denominated assets, including gold, but these pressures are considered temporary and do not reflect long-term fundamental changes.

Relative Geopolitical Stability Eases Tensions

Recent developments regarding Venezuela have helped ease geopolitical risk premiums. A potential agreement between Caracas and Washington on oil exports shows some tactical flexibility, even though the core political crisis remains unresolved. However, the fragility of this balance keeps investors cautious, continuing to support safe-haven demand for gold.

Global Institutional Demand Supports Positive Outlook

Major financial institutions maintain a long-term positive outlook for gold. Morgan Stanley expects gold prices to reach $4,800 per ounce by Q4 2026, based on declining real yields, potential developments in Federal Reserve leadership, and ongoing purchases by central banks and investment funds.

The performance of India’s jewelry sector, driven by seasonal demand and rising selling prices, reflects strong actual demand for gold outside of pure investment, confirming the resilience of global physical demand.

Gap Between Long-Term Expectations and Daily Movements

The gold market currently shows a widening gap between long-term positive outlooks and daily price movements. Structurally, institutions still bet on an ongoing upward trend, while in the short term, the market is governed by tactical considerations including profit-taking and repositioning.

This divergence prompts investors to adopt more precise strategies, distinguishing between short-term trading and long-term investing. Current movements are seen as a phase of profit absorption, not a trend reversal, as long as structural supports remain strong.

Critical Developments in the Coming Days

• (ADP) Private Payrolls Index: Announced today, this December employment figure is an important indicator ahead of official non-farm payroll data.

• Federal Reserve Officials’ Statements: Markets are highly sensitive to any tone indicating monetary policy directions, with dovish tones supporting gold and a weak dollar.

• US Crude Oil Inventories: Data will influence economic strength indicators; inventory declines may boost risk appetite, while increases could support gold demand.

Technical Analysis: Gold Awaits Breakout

Gold opens the trading session maintaining a typical upward structure since the start of the year, with a “consolidation” phase indicating market expectations for a strong move in the next two days.

The $4,450 level has shifted from resistance to strong support, reflecting buying strength. The price is currently moving within a narrow range between $4,455 and $4,491, a range often preceding strong upward waves. Holding above $4,450 suggests that the temporary dip does not indicate a reversal of the overall trend but rather an opportunity to strengthen long positions.

Momentum Indicator Readings:

The MACD lines are converging above zero, indicating accumulation momentum ahead of a potential breakout above $4,555, with the bullish trend remaining dominant.

The RSI oscillates around 68-72 near overbought levels, but the trend strength allows it to stay in this zone without a sharp correction in the near term, confirming continued buyer dominance.

Levels to Watch:

Resistance: $4,525, $4,600, $4,680

Support: $4,370, $4,290, $4,220

Gold Outlook for the Coming Period

Gold is trading in early January amid a complex equation combining short-term pressures from dollar strength and profit-taking, with strong structural supports driven by expectations of rate cuts and global economic and geopolitical uncertainties.

After reaching its historic peak of $4,549.71 in December, gold is undergoing a sensitive repositioning phase in response to any new monetary stimuli. The market is increasingly cautious, awaiting US labor market data, which will determine whether the bets on at least two rate cuts in 2026 will be reinforced or temporarily reevaluated.

Long-term, institutions remain optimistic. Morgan Stanley forecasts $4,800 by the end of 2026. UBS sees the potential for sideways upward movements in the coming weeks within relatively high ranges. Citi confirms that stability above $4,400–$4,500 in January will reflect trend resilience, with possibilities of retesting highs if employment data weakens or easing signals strengthen.

Investors view any temporary pullbacks as healthy corrections within an upward trajectory, as long as global risks remain high and the need for strategic hedging tools persists in a highly volatile environment.