Gold Enters Price Discovery as Bulls Hold Control Above the $4,550 Breakout

Core Viewpoint - Spot Gold (XAU/USD) has entered a price-discovery phase, reaching new records around $4,630, indicating a strong uptrend despite recent volatility [1][4][17] Technical Analysis - XAU/USD is currently in overbought territory with a 4-hour RSI around 65, showing signs of bearish divergence, while MACD indicates cooling upside momentum [2][10] - Immediate support is at $4,555, with further support levels at $4,500 and $4,440, while resistance is noted at $4,625–$4,640 and the next target at $4,714 [3][14] - Major institutions project gold prices to reach between $4,450 and $5,050 over the next 12–18 months, with a consensus around $5,000 for 2026 [9][17] Macro Drivers - The current gold price is influenced by US inflation expectations, with consensus predicting a 0.3% month-on-month rise in CPI, keeping year-on-year inflation near 2.7% [4][14] - Global debt levels are at approximately $346 trillion, about 310% of world GDP, which raises concerns about fiat currency stability and increases gold's appeal as a hedge [6][7] Geopolitical Factors - Civil unrest in Iran and new US tariff threats are contributing to increased demand for gold as a safe haven, reflecting a structural premium in XAU/USD [5][17] - The political landscape surrounding the Federal Reserve, including potential charges against Chair Powell, adds to the uncertainty, further supporting gold prices [4][17] Market Dynamics - Central banks and ETFs are driving demand for gold, with annual purchases reaching around 700 tonnes, establishing a structural floor under demand [8][17] - The shift to percentage-based margins for gold futures by the CME indicates a recognition of increased volatility and the need for more collateral, impacting speculative positions [11][10] Equity Market Response - Gold mining equities are reflecting the gold price movement, with companies like Barrick Mining and Newmont showing significant gains as gold prices rise [12][17] - The upcoming earnings reports from mining companies will be critical in assessing how much of the gold rally translates into free cash flow and dividends [13][17]