Gold has shown the greatest divergence from fundamental factors since the gold rush of the 1970s. Back then, the Fed was forced to cut the interest rate aggressively to end the uptrend in gold prices. Let’s discuss this topic and make a trading plan for the XAU/USD.
The article covers the following subjects:
Major Takeaways
- Russia sold gold at record prices.
- The precious metal is relatively immune to fluctuations in the US dollar.
- UBS forecasts price growth to $6,200 per ounce.
- Short positions on the XAU/USD can be considered at the $5,200–$5,300.
Monthly Fundamental Forecast for Gold
When did gold become a purely speculative asset? Some say it was back in 2022, when the freezing of Russia’s gold and foreign exchange reserves triggered a major anti-dollar movement. Central banks started actively buying up bullion, increasing the share of precious metals in their holdings. Some point to the beginning of 2026, when the XAU/USD rally was exponential. Sooner or later, such a bubble was bound to burst. However, it turned out that all that happened was that dead weight was shed.
Not only investors but also entire states believed the bullish trend was about to reverse. Russia sold about 300,000 ounces of gold in January, receiving about $1.41-$1.68 billion at market prices.
Russia’s Gold Holdings
Source: Bloomberg.
However, with no liquidity shortage and gold detached from fundamental drivers, including real Treasury yields and the US dollar, any outcome is possible. This includes a resumption of the upward trend. UBS believes that gold will reach $6,200 per ounce in the coming months, as demand for the physical asset remains high, the Fed will resume loosening monetary policy, and there is no better hedge against geopolitical risks than gold.
The crowd is driving prices up, while hedge funds and asset managers have reduced their net long position in precious metals to its lowest level in more than a year. Institutional investors are looking at the fundamental revaluation of the XAU/USD in terms of real debt market rates and the US dollar. It is at its highest level since the gold rush of the 1970s. Back then, adjusted for inflation, gold rose twelvefold! Over the past 10 years, it has only tripled. Is the potential for a rally yet to come?
The commodity supercycle of the 1970s ended only when the Fed began aggressively raising rates. Today, that seems as far away as the moon. On the contrary, the futures market gives a 44% probability of three acts of monetary expansion in 2026 and is 75% sure of two.
As long as Donald Trump continues to threaten the world with tariffs, geopolitical tensions will remain high, and gold will continue to respond more to dire predictions than to fundamental factors, so the upward trend in XAU/USD quotes cannot be ruled out.
At the same time, the near-term likely scenario points to consolidation. De-escalation of the conflict in the Middle East, a positive outlook for the US economy, the Fed’s inaction, and the associated strengthening of the US dollar will likely temper gold bulls. On the contrary, armed conflict in Iran and fears of recession in the US may give XAU/USD bulls a helping hand.
Monthly Trading Plan for XAUUSD
Against this backdrop, gold can be sold at the $5,200–$5,300 convergence zone and bought on the dip to the $4,900–$5,000 range.
This forecast is based on the analysis of fundamental factors, including official statements from financial institutions and regulators, various geopolitical and economic developments, and statistical data. Historical market data are also considered.
Price chart of XAUUSD in real time mode
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