Gold prices have dropped from their recent record high of $4,967 but still sit above the previous peak of $4,888. The weakening of the US Dollar continues to support gold prices. Currently, gold is trading at $4,915. After a four-day rally that reached an all-time high, its growth has paused, but it remains on track for a 6.5% gain this week.

US Dollar Weakness and Global Trade Issues

The US Dollar is losing value partly due to strained relations between the US and EU after the Greenland issue. Efforts to improve these ties at the Davos Forum have not fully restored confidence. Technical analysis shows that gold is above previous highs, particularly the $4,880 level. Even with a slight pullback, indicators like MACD and RSI suggest strong bullish momentum. Gold’s advance stopped at the 127.2% Fibonacci level of $4,970, with $5,000 acting as a psychological barrier. Support is found at the previous record high of $4,888 and the January 21 low of $4,775. The US Dollar had its best performance against the Japanese Yen this week.

Positive Outlook for Gold and Strategic Choices

Gold’s overall trend remains strongly bullish, mainly due to the ongoing weakness of the US Dollar. Recent data from the World Gold Council shows that central banks bought more gold in Q4 2025 than ever before in a single quarter. This suggests that prices are likely to keep rising. However, since the Relative Strength Index is pulling back from overbought levels, it may be risky to chase prices at these record highs. A similar pattern occurred before gold reached $4,500 in October 2025, where a brief period of consolidation came before another increase. Therefore, selling cash-secured puts with strike prices near the $4,775 support level could be a smart way to earn premium while waiting for a better entry point. For those seeking leveraged gains, long-term call options with strike prices above the psychological $5,000 level look appealing for the next few months. With December 2025’s CPI showing an annualized increase of 4.1%, which is above the Fed’s target, inflationary pressures should continue to make gold an attractive store of value. Using bull call spreads could also help lower initial costs while aiming for new highs. The main driver is still the “Sell America” trade, which has intensified after failed diplomatic discussions in Brussels last week regarding ongoing trade disputes. This geopolitical uncertainty complicates the Federal Reserve’s ability to adopt a more aggressive policy, putting further pressure on the dollar. We’ve seen net outflows from U.S. equity funds exceed $50 billion so far in 2026, with a large portion moving into gold-backed ETFs. Create your live VT Markets account and start trading now.

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