After a 65% rally in 2025, gold keeps setting new records in 2026. Shortages of the physical asset, geopolitics, threats to the Federal Reserve's independence, and fiscal problems lead Citigroup to project that the precious metal could reach the psychologically important level of $5,000 per ounce within the next three months. A pullback may follow after that.

January began with shocks. The US abduction of the President of Venezuela, mass protests in Iran in which more than 2,500 people have already been killed, the unresolved war in Ukraine, and threats by Donald Trump to annex Greenland to the United States — all this heightens nervousness in financial markets and demand for safe-haven assets. Gold appears to be the best option.

The precious metal is supported not only by geopolitics but also by expectations of continued Fed monetary expansion, attacks by the White House on its chair, and US fiscal problems. The slowdown in US inflation in December strengthened the belief that the Federal Reserve will cut rates in June and twice in 2026. This circumstance points to bullish prospects for XAU/USD on a medium-term investment horizon. At the same time, a strong dollar amid a prolonged cycle pause may become a headwind for the pair.

Dynamics of the US dollar and gold

However, gold has plenty of other rally drivers to ignore this negative. Consider, for example, a possible Supreme Court decision declaring the White House's tariffs illegal. In 2025, the US raised $264 billion in import tariff revenues — $185 billion more than the previous year. If this money must be returned, a growing budget deficit will force investors to sell bonds and increase the share of precious metals in portfolios.

Moreover, Trump's big and costly tax-cut law will be expensive for the United States. According to the nonpartisan Congressional Budget Office, it will add $3.4 trillion to the budget deficit over 10 years.

The US president is opening the coffers with an attitude of "after me, the deluge," and traders are actively buying gold in so-called devaluation trades. When currencies and bonds lose value, demand for precious metals rises.

Fuel is also being added to the XAU/USD rally by Donald Trump's attacks on the Fed chair. Jerome Powell was handed a lawsuit. The central bank's independence is under threat, jeopardizing the US dollar's status as the world's main reserve currency. Capital outflows from the United States risk collapsing the USD index and pushing gold toward $5,000 per ounce.

Technically, on the daily chart, gold shows a strengthening uptrend, evidenced by the price moving away from dynamic support in the form of moving averages. In such conditions, buying on pullbacks becomes a viable strategy. Targets for longs are $4,730 and $4,850 per ounce.