Gold prices hit a record high before momentum slowed amid profit-taking and geopolitical tensions.
During the U.S. trading session on Friday (January 17), the spot gold price declined as some traders chose to reduce their positions after gold achieved a 7.4% increase since the beginning of the year. Although safe-haven demand and expectations of Federal Reserve rate cuts have continuously supported the market throughout 2025, this year’s surge in gold prices was driven by an unexpected geopolitical event in Iran — an event that even prompted President Trump to threaten military action.
At 00:43 Beijing Time, spot gold was trading at $4,597.05, down $18.68 or 0.40%.
As concerns over Iran eased, the rally in gold prices was capped after hitting a record high of $4,642.97.
On Wednesday, gold prices reached a historical peak of $4,642.97, but upward momentum subsequently weakened as Trump downplayed expectations of a military strike against Iran. Nevertheless, expectations of interest rate cuts and safe-haven buying continued to provide strong support for the market.
Strategic Crossroads: To Chase the Rally or Wait for a Dip?
The rapid and sharp rise in gold prices provided bulls with a reason to take profits. Investors now face two strategic options: either chase the rally by breaking through historical highs or wait for prices to retreat to a value range before buying on dips. Ultimately, this decision depends on individual investment preferences. However, the author observes that long-term bulls tend to favor prudent positioning, while short-term traders dominate short-term rallies and market volatility. As long as the overall uptrend remains intact, this pattern is expected to persist.
Economic Data Supports Expectations of Federal Reserve Rate Cuts in 2026
Economic data also influenced gold market movements this week. The U.S. consumer inflation data released on Tuesday reinforced market expectations of one to two rate cuts by the Federal Reserve this year, opening up room for further gains for gold bulls. Although a rate cut in January is unlikely, traders have already priced in at least two rate cuts between March and December 2026. Thursday’s better-than-expected initial jobless claims data weakened bets on an earlier Fed rate cut, but the news did not entirely rule out the possibility of cuts later this year.
Geopolitical Tensions Continue to Provide Support but Struggle to Sustain Current Highs
Although tensions surrounding Iran have eased somewhat, they have not completely subsided, and the geopolitical backdrop continues to support gold prices — albeit with reduced strength given the current high price levels. This suggests that traders may be waiting for a price pullback before re-entering the market to establish new positions.
Technical Analysis: Uptrend Remains Intact, Key Levels Under Spotlight
(Daily Gold Spot Chart Source: YiHuiTong)
On the daily chart, the primary trend for gold remains upward. A breakout above $4,642.97 would signal a resumption of the uptrend, while a drop below $4,407.83 would shift the secondary trend to a downtrend. A breach below $4,274.02 could reverse the primary trend to a downtrend.
The 50-day moving average is at $4,287.02, which serves as both an effective trend indicator and a key support level.
This rally in gold prices began on October 28, 2025, from $3,886.46 and reached its historical high at $4,642.97. The 50% retracement level stands at $4,264.71, aligning closely with the major support at $4,274.02 and the 50-day moving average at $4,287.02, collectively forming a support zone.
In the short term, the two 50% retracement levels at $4,525.40 and $4,458.49 represent key target zones that may attract buying interest.
Short-Term Outlook: Uncertainty Over Iran Situation to Dominate Friday’s Close
Amid concerns over a potential escalation in the Iran situation, gold prices may remain firm until the market close. Fresh buying could even drive prices to retest the historical high of $4,642.97. However, if traders perceive a significant reduction in geopolitical risks, profit-taking might push prices back into the range between $4,525.40 and $4,458.49.
