Gold price forecast for the end of January 2026
After losing more than 4% in the last week of the year, gold (XAU/USD) has gathered momentum as trading conditions have always seen.
Although XAU/USD entered a consolidation phase following the rally earlier in the week, it managed to record weekly gains. December inflation data from the US and geopolitical developments could move gold's action in the short term.
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By the end of 2025, the price of gold has returned
Gold posted heavy losses between the Christmas and New Year holidays. In the absence of fundamental drivers, profit-taking appears to have fueled this activity, exacerbated by thin trading volumes.
As market conditions began to normalize, XAU/USD rose sharply and gained more than 2.5% on Monday.
In addition, rising geopolitical tensions on news that the US military entered Venezuela and arrested President Nicolas Maduro and his wife over the weekend allowed gold to benefit from safe-water flows.
After extending its rally and gaining another 1% on Tuesday, renewed strength in the US dollar (USD) and the CME Group's decision to increase margins on gold and silver futures caused XAU/USD to lose interest.
U.S. private sector payrolls rose by 41,000 in December, following a 29,000 drop in November, according to data published by Automatic Data Processing (ADP).
On another positive note, the Institute for Supply Management (ISM) reported that the Services Purchasing Managers' Index (PMI) rose to 54.4 from 52.6 in December.
Moreover, the PMI survey's employment index rose to expansion territory above 50 for the first time since June.
With these data confirming the Federal Reserve's (Fed) policy in January, gold edged lower in the middle of the week before entering a consolidation phase.
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Meanwhile, China announced export controls on silver (XAG/USD). With this development, silver prices rose sharply to start the week, gaining more than 10% in a two-day period.
When reporting on the issue, “China is the second largest global silver miner, but the Chinese dominate the silver market with their large refining capacity. The country controls 60 to 70 percent of the net silver supply,” said Mike Maharey, FXStreet contributor and market analyst at Money Metals Exchange.
Although the CME margin increase caused XAG/USD to correct sharply, the gold/silver ratio, which represents the number of ounces of silver needed to buy an ounce of gold, fell about 4% for the week.
At around 57, the gold/silver ratio is currently at its lowest level since August 2013.
On Friday, the US Bureau of Labor Statistics (BLS) reported that non-farm payrolls rose by 50,000 in December, compared to market expectations of 60,000.
On a positive note, the unemployment rate fell to 4.4% from 4.6% in November. The market's reaction to the employment data was short-lived, and gold entered the weekend in the upper half of its weekly range.
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Gold traders to focus on geopolitics and US inflation
In terms of data releases, the economic calendar will be relatively simple. On Tuesday, the BLS will publish the Consumer Price Index (CPI) for December.
November's retail sales and producer price index also appear in the US economic data, which are likely to be largely ignored by market participants.
The December inflation data may not affect the Fed's January decision in a significant way, but it may create a significant surprise, especially the market reaction to the monthly CPI publication.
A reading of 0.3% or higher could revive concerns that inflation is sticking around and boost the US dollar in the short term.
Conversely, a reading below 0.2% could have the opposite effect on the currency's performance and increase the XAU/USD margin.
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Investors will be closely monitoring geopolitical headlines throughout the week. US Secretary of State Marco Rubio is set to meet with officials from Denmark and Greenland.
In an interview with the New Times, US President Donald Trump reiterated his desire to control Greenland. “Ownership is very important,” Trump told the newspaper.
“Because that's what I feel is psychologically important to success. Ownership gives you things that you can't do, whether you're talking about a lease or a contract. Ownership gives you things and entities that you can't get from just signing a document.”
It is difficult to say what the next development will be in this matter, but the escalation of the dispute between the EU and the US could make investors seek asylum.
In this case, gold can gather strength.
Unrest in Iran, led by anti-government protests across the country, including in the capital Tehran, could also affect risk sentiment in the near term.
US President Trump's officials have said the US could take military action if officials use lethal force against protesters.
The escalating conflict in Iran and active US involvement will allow gold to continue to benefit from safe-haven flows.
