Gold Outlook: XAU/USD Nears the $5,000 Threshold

Gold has delivered a strong upside performance this week, extending gains for a fourth consecutive session and advancing more than 7% overall. Price action is now approaching the psychologically significant $5,000 per ounce level. The rally continues to be supported by weak substitute asset returns, particularly falling US Treasury yields, alongside fragile market confidence. As long as these conditions persist, the broader bias for gold remains constructive.

Macro Backdrop: Treasury Yields Remain a Key Support

US Treasury yields have resumed their downward trend, with the 10-year yield retreating toward the 4.2% area after failing to sustain a move above 4.3%. This renewed softness reinforces gold’s relative appeal, as lower yields reduce the opportunity cost of holding non-yielding assets.

The lack of a sustained recovery in bond yields continues to encourage capital rotation into safe-haven assets. As long as yields remain structurally capped, gold demand is likely to stay supported in the near term.

Market Confidence Still Fragile

Recent comments from President Trump at the Davos Forum signaled a temporary easing of diplomatic tensions with Europe, including the suspension of proposed tariff measures. While this helped stabilize sentiment, markets appear to view the move as tactical rather than structural.

This cautious interpretation is reflected in sentiment indicators. The Fear and Greed Index has rebounded only modestly into neutral territory and has begun to flatten, suggesting confidence has yet to fully rebuild. Persistent uncertainty continues to underpin demand for defensive assets, keeping gold well supported.

Technical Outlook: Bullish Structure Intact

Gold remains in a well-established bullish trend, defined by consistent higher highs and higher lows. There are currently no technical signals suggesting a trend reversal. However, as price approaches major psychological resistance, short-term consolidation or pullbacks would be consistent with healthy trend behaviour.

• RSI remains above 70, indicating overbought conditions and increasing the risk of short-term corrective moves without undermining the broader trend.

• MACD continues to expand above the zero line, confirming strong bullish momentum and reinforcing medium-term upside bias.

XAU/USD Daily Chart

Key Technical Levels

• $5,000: Major psychological resistance. A sustained break above this level could trigger accelerated upside momentum.

• $4,700: Near-term reference level that may attract buyers on shallow pullbacks.

• $4,538: Critical support aligned with recent lows and the primary bullish trendline. A decisive break below would weaken the bullish structure.

Bottom Line

Gold’s advance toward $5,000 is being driven by a favorable macro and sentiment backdrop, with weak yields and incomplete confidence recovery continuing to support demand. While overbought conditions increase the risk of short-term pauses, the dominant trend remains firmly bullish as long as key support levels hold.