The dollar is not gold’s friend

XAU/USD

Key zone: 5,000.00 - 5,150.00

Buy: 5,200.00 (on a confident breakout of the 5.150 level); target 5,400-5.550; StopLoss 5,120.00

Sell: 4,950.00 (on strong negative fundamentals); target 4,700-4,550; StopLoss 5,030.00

The fundamental backdrop is increasing bearish pressure on gold and silver futures, as metal markets remain nervously focused on upcoming news and key U.S. economic data.

Precious metals were volatile last week, as a combination of profit-taking and overheated positioning pushed prices down from record highs. Uncertainty surrounding U.S. monetary policy also added to volatility.

The key factor supporting gold remains global geopolitical tensions and the growing shift of many countries toward safe-haven assets while reducing exposure to U.S. government debt. In an environment of uncertainty, investors continue to diversify their portfolios by including precious metals.

Almost all central banks worldwide are reducing their dollar reserves, and international investors are increasingly choosing non-U.S. securities.

For example, China’s central bank extended its gold purchasing program for the 15th consecutive month in January. According to U.S. Treasury Secretary Bessent, the precious metals market in China has become uncontrollable, forcing local exchanges to tighten margin requirements.

In reality, the CME is doing the same, and strong demand is not limited to China but is also evident in India. Capital inflows into gold ETFs there are now comparable to inflows into equity funds. For the first time since 1996, foreign banks now hold more gold than U.S. dollars as reserves.

The “Trump factor” suggests the dollar will continue to weaken for a long time, at least until the end of this year. His policies on trade, sanctions, migration, and national security are pushing the world away from the U.S. dollar.

U.S. Government Debt

This is a separate source of concern: under Trump, it could increase by several more trillion dollars.

Pressure on the Federal Reserve

Ongoing pressure on the Fed and on Powell personally is driving investors out of the dollar. If the Fed loses its independence and becomes politically dependent, Trump would effectively control interest rates, lowering them to economically unjustified levels — and the dollar would collapse.

Trade War

Trump continues to use tariffs as his main tool of political pressure, while many countries realize that tomorrow the White House may declare their territories “critically important for U.S. national security.”

Every decline in gold reflects profit-taking and position reduction, not renewed buying frenzy.

It is important that gold remains above the $5,000 level — a psychological zone that could become a key technical barrier for sellers, even though buyers remain cautious after recent volatility.

In fact, hedge funds and asset managers — the so-called “smart money” — have already made their decision. They have reduced net long positions in gold to the lowest levels since October. In the long term, the outlook remains positive.

At the moment, the market crowd is split into two groups. The first started buying gold a year ago and is now up about 70%; this group is calling to “hold and buy.” The second entered long positions above $5,100 and is now desperately looking for a way out.

Buyers need to break the nearest resistance at $5,051. This would open the way toward $5,150, above which a breakout will be quite difficult. The most distant target is the $5,223 area.

If gold falls, bears will try to take control of the $4,975 level. If successful, a breakdown of this range would seriously damage bullish positions and push gold toward the $4,890 low, with a potential move to $4,830.

So we act wisely and avoid unnecessary risks.

Profits to y’all!