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Gold (XAU/USD) surges during the North American session on Friday, up by over 1% as the US Dollar (USD) gets smashed on intervention rumors to propel the Japanese Yen (JPY) in the FX markets, amid an improvement in risk appetite that pushed the yellow metal to fresh all-time highs at $4,988.

Bullion hits fresh record highs as sharp Dollar losses outweigh improving risk sentiment and steady yields

Market mood remains upbeat, yet Bullion prices continue to run up as the US Dollar tumbles to its lowest level since October 2025. The US Dollar Index (DXY), which tracks the buck’s performance against a basket of six currencies, drops close to 0.50% at 97.79, after reaching a daily low of 97.70.

US Treasury bond yields remained stable during the day, even though economic data in the US revealed that American households are turning optimistic, following the University of Michigan Consumer Sentiment survey.

Earlier, business activity in the US improved, according to S&P Global. Despite this, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, said that “A worrying subdued rate of new business growth across both manufacturing and services adds further to signs that Q1 growth could disappoint.”

US GDP figures for the third quarter of 2025 improved sharply and exceeded the forecast, with the economy rising 4.4% QoQ.

In the meantime, expectations that the Federal Reserve would cut rates in 2026 remained unchanged, with traders projecting 42.5 basis points of easing, according to Prime Market Terminal data.

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Source: Prime Market Terminal

If traders continued to trim Fed dovish bets, this should cap Gold’s advance, which is up 15% year-to-date (YTD), shy of the 39% reached by Silver since the beginning of 2026.

What’s ahead in the US economic docket?

Next week, traders will eye Durable Goods Orders, the ADP Employment Change 4-week average, the Federal Open Market Committee (FOMC) monetary policy meeting and the Fed Chair Jerome Powell press conference.

Daily digest market movers: Gold surges despite improving Consumer Sentiment

• Consumer Sentiment by the University of Michigan improved in January, climbed to a five-month high of 56.4, up from 54 in the preliminary estimate and above forecasts of 54. Despite improving, Joanne Hsu, the survey’s director, noted that consumers continue to feel pressure on purchasing power, citing elevated prices and concerns about a potential softer labor market.
• Inflation expectations for one-year slipped to 4% from 4.2% and for five-years dipped from 3.4% to 3.3%.
• S&P Global data indicated a modest improvement in US business activity in January, with the preliminary Composite PMI inching up to 52.8 from 52.7. However, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, cautioned that subdued new business growth across manufacturing and services raises the risk that first-quarter growth may underperform.
• The US 10-year Treasury Note is yielding 4.255% flat. US real yields, which are calculated with the nominal yield of the 10-year note minus inflation expectations for the same period, rise nearly three and a half basis points up at 1.945%, but fail to cap Bullion prices.
• US President Donald Trump said on Thursday that he has completed interviews for the next Federal Reserve (Fed) Chair and confirmed he has made his choice, adding that a formal announcement is likely before the end of January. Media reports suggest the shortlist includes Kevin Hassett, Rick Rieder, Christopher Waller, and Kevin Warsh.

Technical outlook: Gold price set to challenge $5,000 in the short-term

Gold’s parabolic uptrend extended for the fifth-straight day, with the yellow metal poised to challenge the $5,000 mark. Price action remains constructive, and bulls continued to gather momentum as shown by the Relative Strength Index (RSI), which, despite being overbought, cleared the latest peak, an indication that the uptrend remains strong.

If XAU/USD clears $5,000, the next key resistance levels would be $5,050 and $5,100. Conversely, if XAU/USD retreats below $4,950, the next support would be $4,900.

(Click on image to enlarge)

Gold Daily Chart

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