Gold: First Record of 2026 Sets Tone as Upside Remains Path of Least Resistance
LONDON (January 12) Gold has made its first record high of 2026. The key question is whether we will see repeated highs like last year, or whether it will be different this time around. For now, anyway, the path of least resistance is to the upside, and as long as price action maintains the existing structure of higher highs and higher lows, there’s little or no point in trying to pick a top in gold.
Fed Independence Called Into Question
The big news today has been a surprise announcement that Federal prosecutors have opened a criminal investigation into Fed Chairman Jerome Powell. Investors worried about the Fed’s independence and thus sold US assets across the board and sought the safety of gold and silver. Both metals surged to record highs as Powell said the move stemmed from the Fed’s reluctance to follow the White House’s preferences on interest rates.
Gold climbed to above $4600 before easing back a little. The metal’s latest gains and the dollar’s drop come hot on the heels of a mixed US jobs report on Friday that caused the dollar to extend its recent advance. Should concerns about the Fed’s independence quickly fade into the background, then gold could ease back down as the dollar regains its poise.
My expectation is that Powell will serve the remainder of his term and the Fed will continue to set rates independently, with the decisions based on incoming economic data. Thus, the focus should return to macroeconomics fairly quickly with CPI and retail sales in focus this week.
US Dollar in Focus Ahead of CPI Release
Following a mixed-to-weak US jobs report on Friday, tomorrow’s inflation data is expected to come in unchanged at 2.7% year-over-year, while both the headline and core monthly estimates are seen climbing 0.3%. But if core CPI comes in even slightly above consensus, this could re-ignite a US dollar rally again.
Meanwhile, a potentially unfavourable Supreme Court ruling on Trump’s tariffs, due at some point this week, could also be another factor that could support the dollar. But all of that is now secondary. Markets need clarity on the Fed situation before rebuilding dollar longs. A much weaker inflation report and growing doubts over Fed independence could trigger a much deeper USD sell-off.
Geopolitical Risks Keep Gold Supported
Meanwhile, gold continues to find support from ongoing geopolitical risks. While these risks had eased a little, the recent flare-up of tensions in Iran has added fresh uncertainty to the region.
The prospect of another US involvement is the key risk there. And let’s not forget about the developments in Venezuela and over Greenland, both serving as a reminder that geopolitical shocks can re-emerge quickly and without warning.
So, safe-haven demand is therefore likely to remain in place for gold until things calm down in Iran and we get some clarity over the situation in Greenland.
Gold Technical Analysis and Key Levels to Watch
From a technical perspective, the gold’s trend remains constructive. The metal continues to print a clear sequence of higher highs and higher lows, which makes aggressive bearish calls hard to justify. As long as that structure holds, selling gold aggressively simply doesn’t make much sense at this stage – at least for trend followers anyway. Mean reversionists might well say otherwise.
In any case, for the majority of traders, they really need to see a decisive bearish signal before entertaining short positions. While the market does appear overbought, that alone is not a compelling reason to sell.
On the downside, the first key support area sits between $4,500 and $4,550, which marks the former record high from December and represents an important psychological zone. Below that, the previous October high comes in around $4,380, followed by trendline support near $4,350.
This $4,350–$4,380 area, highlighted in grey on my chart, previously acted as strong resistance before gold finally broke higher in December. Although prices briefly slipped below this region, they quickly reclaimed it at the start of the year before pushing on to fresh record highs. For me, this zone now represents the line in the sand. A sustained move back below it would put the bulls on the back foot and could open the door to a deeper correction.
On the upside, there are no obvious resistance levels visible on the chart, which brings the next round-number targets at $4,600 and $4,700 into focus. It is also worth monitoring the Fibonacci extension levels shown on the chart at $4,625, $4,687, and $4,720, as these may attract profit-taking from Fibonacci-based traders.
Investing.com
