**Gold Market Technical Analysis** Gold (XAU/USD) is currently priced at around $4,600. Recently, it dipped but did not fall below $4,570. This comes after an unsuccessful attempt to reach a record high of $4,640, largely due to a stronger US Dollar. Recent US data showed a decrease in weekly jobless claims and improved manufacturing conditions in New York and Philadelphia. These improvements support the idea that the US Federal Reserve will keep interest rates steady for now. From a technical standpoint, the XAU/USD pair is showing bearish signs through a head-and-shoulder pattern, which could indicate a possible trend change. The Relative Strength Index (RSI) is nearing a bearish divergence, and the Moving Average Convergence Divergence (MACD) line is below the signal, suggesting a loss of momentum. To see a more significant correction, gold must break below $4,570, with targets around $4,500. If it rises, breaking past $4,640 could lead to targets of $4,689 and $4,763 based on Fibonacci extensions. **Central Bank Activity** Gold has always been viewed as a safe asset and a hedge, and central banks are significant buyers of gold. In 2022, they made record purchases of 1,136 tonnes. The price of gold usually moves in the opposite direction of the US Dollar and riskier assets, and it often reacts to geopolitical tensions and changes in US interest rates. As gold hovers around $4,600, this is a critical moment for the market. The failure to surpass the all-time high of $4,640, combined with strong US economic data, suggests that the Federal Reserve is unlikely to cut rates soon. This environment can make it challenging for gold, a non-yielding asset, to maintain its upward momentum. The most recent Consumer Price Index (CPI) report from January 14th showed that core inflation remains high at 3.1%. This data gives the Fed little reason to relax its monetary policy. Consequently, the US Dollar Index has remained firm, above 105.5, a level not seen since last November, creating a headwind for gold. This situation leads derivative traders to consider protective strategies against a potential decline. A small head-and-shoulders pattern is forming on the charts, often indicating a trend reversal. This makes put options with strikes near $4,500 an interesting option in the upcoming weeks. A confirmed break below the $4,570 support would trigger a deeper correction toward the 100-period moving average. The fading momentum on the MACD supports this cautious outlook. **Option Strategies for Traders** Despite these concerns, the overall bullish trend is still intact. We should remember the sharp rallies that followed similar patterns in 2025. Traders may want to buy call options with strike prices above the $4,640 high to prepare for a potential breakout towards the next target of $4,689. This strategy could be profitable if the current weakness turns out to be a brief pause rather than a full reversal. Looking at the larger context, central banks were significant buyers throughout 2024 and 2025. However, initial data for the fourth quarter of 2025 showed a 15% slowdown in their buying pace. This aligns with recent CFTC data, which indicates that large speculators have reduced their net-long positions for the second consecutive week, suggesting that some big players are taking profits at these high levels. Create your live VT Markets account and start trading now.

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