By Dilin Wu, Research Strategist at Pepperstone
Gold hits new all-time highs as geopolitical tensions and Fed personnel uncertainty boost safe-haven demand. Short-term price bias remains upward, but crowded longs, TACO risk, and policy developments could amplify volatility.
Over the past week, gold consolidated near high levels before pushing to fresh all-time highs. Ongoing geopolitical tensions, Trump’s tariff threats against European nations, and the unresolved Fed chair succession have been the key drivers behind this rally.
This week, market attention is focused on two major events: first, Trump’s upcoming speech at the Davos World Economic Forum, which could reshape market pricing for geopolitical and trade risks; second, the U.S. Supreme Court’s ruling on the Lisa Cook case, which will directly influence expectations around Fed independence and the future policy path.
Both events have the potential to significantly affect short-term gold positioning.
Technical Observation: $4,700 is a Key Target, but Selling Pressure Persists
On the XAUUSD daily chart, gold’s first sustained break above $4,600 did not trigger an immediate surge, instead entering several days of high-level consolidation. This reflects a rebalancing of buying and selling pressures, with shorts gradually emerging. Last Friday, prices briefly dipped toward the October high around $4,550.
However, on Monday, gold gapped up nearly $40 at the open, intraday gains approaching 1.8%, pushing to $4,690 and a new all-time high. If momentum continues, $4,700 will serve as the first key reference before further upside can be unlocked.
That said, the rapid advance has left longs crowded, with RSI entering overbought territory. This increases sensitivity to any marginally negative news. In the event of a pullback, support is likely at $4,600 and then $4,550.
Greenland Tariff Threat: Immediate Catalyst
The direct catalyst behind this leg higher came from Trump’s weekend tariff threat over Greenland.
Trump stated that if European nations do not support the U.S. “taking control of Greenland,” a 10% tariff could be imposed from February 1, potentially rising to 25% later. This move is being seen as a significant source of transatlantic uncertainty, exacerbating trade tensions and raising tail-risk for broader geopolitical conflict.
Heightened geopolitical anxiety, coupled with concerns over U.S. government stability and dollar credibility, has reinforced the safe-haven logic of “long gold, short USD.”
Fed Personnel Uncertainty: Repricing Risk Factors
Beyond geopolitics, internal Fed uncertainty is also providing strong support for gold.
With Powell under investigation, Trump’s recent remarks have been interpreted as reducing the likelihood of Hassett becoming the next Fed chair, while increasing expectations for Warsh or BlackRock’s Rieder.
Additionally, the Supreme Court’s upcoming ruling on Fed Governor Cook introduces volatility into pricing around Fed independence and policy continuity. Personnel uncertainty weakens the credibility of forward guidance, prompting some funds to shift into gold as a hedge.
Structurally Bullish, But Watch for Short-Term Volatility
Overall, gold’s new highs are the result of combined geopolitical escalation and Fed uncertainty. Coupled with longer-term tailwinds like central bank buying, the path of least resistance remains upward. But with crowded longs, any signals of policy easing or risk de-escalation could trigger temporary pullbacks.
For the rest of this week, there are two key risks to watch. First, Trump will speak at the Davos World Economic Forum on “Cooperation in an Increasingly Competitive World,” with his tariff policies and geopolitical stance as the main focus.
Regarding Greenland, although the White House is taking a hard line and the EU is preparing countermeasures, both sides currently appear more focused on building negotiating leverage than taking concrete action. If a TACO moment occurs again and Trump softens his rhetoric, gold’s safe-haven premium could quickly retrace.
Second, on January 22, the U.S. Supreme Court will hear the case on the legality of Trump’s dismissal of Fed Governor Cook, widely seen as a test of the Fed’s independence. Given Trump’s recent aggressive moves on tariffs, geopolitics, and pressure on the Fed, the likelihood of judicial support for his action appears limited.
Meanwhile, the legal basis for the investigation into Powell remains weak, and with broad support from other major central banks, the market increasingly views these events as political pressure rather than an institutional shock. If Cook retains her seat, concerns over Fed independence could ease, putting short-term pressure on gold.
Finally, the COMEX shift to dynamic margin requirements may curb short-term speculative longs, amplifying price swings. More than directional bets, traders should actively manage positions and stay alert for unexpected volatility.