Gold Analysis: XAU/USD Approaches the $5,000 per Ounce Level

It has been a clearly positive week for gold, with the metal currently posting four consecutive bullish sessions and accumulating gains of more than 7.2%, moving steadily closer to the $5,000 per ounce area. Buying pressure has remained consistent, supported by the fact that substitute assets—particularly U.S. Treasury bonds—have failed to offer attractive yields in the short term. In addition, some confidence indicators have yet to fully recover, which continues to favor a positive bias for gold. As long as these factors remain in place, buying pressure is likely to stay relevant over the coming trading sessions.

Treasury yields struggle to recover

One of the key factors to monitor in the short term is the behavior of 10-year U.S. Treasury bonds, considered one of gold’s main substitute assets. In recent sessions, Treasury yields have resumed a downward trajectory, falling back toward the 4.2% area after briefly reaching levels near 4.3%, once again highlighting weakness in interest rates.

Source: TradingEconomics

This environment tends to favor gold, as declining bond yields reduce their relative appeal and encourage investors to redirect capital toward safe-haven assets such as the precious metal. As long as Treasury yields continue to show structural weakness, this capital rotation is likely to persist, supporting a solid demand bias and sustaining buying pressure in XAU/USD in the short term.

Has market confidence fully recovered?

During yesterday’s session, relevant comments from President Donald Trump at the Davos Forum pointed to a temporary de-escalation of diplomatic tensions with Europe, including the suspension of the proposed 10% tariffs that were expected to take effect on February 1. However, despite the removal of the immediate threat, the market has interpreted this move as a short-term tactical de-escalation, which does not necessarily resolve deeper structural issues, leaving room for risk to re-emerge quickly.

Looking at the Fear and Greed Index, confidence did show an initial rebound following these announcements, but the index only managed to return to the 52-point area, remaining within neutral territory, characterized by elevated market indecision. Moreover, the indicator’s curve has begun to flatten, suggesting that confidence has yet to fully consolidate in the short term.

Source: CNN

This backdrop is particularly relevant for gold, as the metal tends to benefit when market confidence remains fragile. As long as sentiment indicators fail to show a strong and sustained recovery, part of the market may continue to seek defensive assets such as gold. Consequently, this environment of persistent uncertainty could continue to support meaningful buying pressure in XAU/USD over the coming sessions.

Gold Technical Outlook

Source: StoneX, Tradingview

• Dominant bullish trend: For several months, gold has maintained a solid bullish structure, defined by higher highs and higher lows that have consistently pushed prices to new record levels. At this stage, there are no clear technical signals pointing to a trend reversal. However, as price approaches key psychological levels, room may open for short-term technical pullbacks, serving as a natural pause in buying pressure without jeopardizing the broader bullish trend.
   

• RSI: The RSI remains above the 70 level, within overbought territory, suggesting a potential excess in bullish momentum. This setup could allow for short-term corrections as part of a healthy technical adjustment within the prevailing uptrend.
   

• MACD: The MACD continues to show an expanding histogram above the zero line, reflecting a strong bullish impulse in short-term moving averages. This suggests that, despite room for corrections, bullish dominance may remain relevant in the medium term, in line with the current trend structure.
   

Key levels to watch:

• $5,000 – Crucial resistance: In the absence of historical references, this level represents the main psychological barrier for price. A sustained breakout above this area could trigger a more aggressive bullish acceleration and reinforce the prevailing buying bias.
   
• $4,700 – Nearby barrier: A relevant psychological level that could act as a key reference in the event of short-term downside corrections.
   
• $4,538 – Critical support: This area aligns with recent lows and the primary bullish trendline. A sustained break below this level would put the current bullish structure at risk and could open the door to a short-term bearish bias.
   

Written by Julian Pineda, CFA, CMT – Market Analyst

Follow him on: @julianpineda25