Since 2022, the processes of de-dollarization and diversification of gold and foreign exchange reserves by central banks have served the gold market well. In 2026, geopolitical factors will likely accelerate these processes and push the precious metal to new all-time highs. Let's discuss this topic and make a trading plan for the XAU/USD.
The article covers the following subjects:
Major Takeaways
- The US does want to buy Greenland.
- The US administration is counting on a quick victory.
- The schism in the Western camp is good news for China and Russia.
- If gold fails to remain above the resistance level of $4,725, a short-term sell-off may begin, followed by a dip-buying opportunity.
Weekly Fundamental Forecast for Gold
Some compare Donald Trump's tariff threats against Europe with the aim of buying Greenland to racketeering by the mafia, while others compare them to the global economy entering an era of resource nationalism among major powers. Currencies are not an effective tool in this game, so here gold comes into play. Its price has risen 70% since Trump took office and has exceeded $4,700 per ounce for the first time in history.
If investors always bet on extreme outcomes, they would surely lose money. Donald Trump claims that the purpose of his tariff threats is to acquire Greenland from Denmark. The US leader considers Europe weak and is confident that it will not resist for long. In fact, what is at stake is a split within Western countries, which China and Russia can easily take advantage of. This will certainly accelerate the processes of de-dollarization and diversification of gold and foreign exchange reserves by central banks, underpinning the upward trend in XAU/USD quotes.
Gold and Silver Performance
Source: Bloomberg.
Not so long ago, statements about buying Greenland were perceived as a joke, similar to Canada joining the US as the 51st state. However, Donald Trump's tariff threats and his desire to discuss this topic with European partners in Davos make it clear that all jokes have been set aside. The US sees the island as the foundation of American and global security.
The escalation of the trade conflict between the US and Europe has allowed Citigroup to maintain its forecast of a rally in gold to $5,000 and silver to $100 per ounce within three months. The prolonged uncertainty is preventing precious metals from returning from North America to Europe and Asia, creating a shortage and driving up prices. According to Ninety One, the fundamentals underlying a rally in the XAU/USD remain intact. These include US dollar weakness, geopolitical tensions, expectations of Fed rate cuts, concerns about the US budget deficit, and sustained demand from central banks.
The tailwind for gold could strengthen if judges allow Donald Trump to dismiss FOMC member Lisa Cook. The case will be heard on January 21, and a verdict favorable to the Trump administration would add to the risks of the Fed losing its independence. Against this backdrop, the US dollar will weaken, and the XAU/USD will likely gain traction.
Conversely, if the Supreme Court rules that US tariffs are illegal, it will end the trade conflict between the US and Europe. A division within the Western bloc can be avoided, as it would have a negative impact on the precious metal.
Weekly Trading Plan for XAUUSD
Gold is approaching the first of two bullish targets of $4,730 and $5,050 per ounce. If it fails to remain above the resistance level of $4,725, a short-term sell-off may begin, followed by a dip-buying opportunity.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance broker. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2014/65/EU.
According to copyright law, this article is considered intellectual property, which includes a prohibition on copying and distributing it without consent.
