Gold rally hits $4,900: Why the January FOMC, geopolitics, and technical warnings mark a critical juncture?

• Rare drivers fuel surge: Rally past $4,900 driven by inflation, fiscal expansion (Stagflation), and geopolitical risk; 2026. Goldman Sachs targets raised to $5,400.
• FOMC narrative is key: Jan 27-28 meeting expected to hold rates. Focus is on "Neutral Rate" rhetoric: 3.5% terminal rate risks pullback; cooling labor market focus provides a tailwind.
• Upside supported, retracement warned: COT shows Managed Money not over-extended, however, swap dealers are at their extremes. Highly elevated RSI (78.00) and Stochastic (87.90) show divergence, warning of a potential retracement.

The historic rally in gold prices, which saw the metal surge past $4,900 per ounce in late 2025 and early 2026, was driven by a rare convergence of macroeconomic and geopolitical factors. With the January 27–28th, 2026, FOMC meeting approaching, the backdrop of high-altitude stability for gold is in focus. Prices have already surged significantly—trading near $4,800–$5,000—driven by a combination of fiscal expansion, geopolitical friction, and institutional uncertainty. The January meeting is less about a "rate move" and more about the "narrative shift."

According to the CME Fedwatch tool, the futures markets are pricing in just under two 25-bps interest rate cuts for 2026, with the cut expectations mostly for the second half of 2026. Lower nominal rates reduce the "opportunity cost" of holding gold, which pays no interest, making it more competitive against Treasury bonds.

For the January 27 - 28, 2026, FOMC meeting, the market consensus is that the Fed will hold rates steady at 3.50%–3.75% after a string of cuts in late 2025. The CME Fedwatch tool has 95% of participants expecting the FED to hold, meaning a pause is largely priced in. However, gold’s sensitivity to the "Neutral Rate" remains the key variable. If Chair Powell’s press conference suggests that 3.5% is the new floor (the terminal rate) due to resilient growth, gold could see a short-term "profit-taking" pullback. Conversely, if the Fed expresses concern over the cooling labor market (currently adding only 50k jobs/month), markets will pull forward expectations for a June cut, providing a tailwind for non-yielding bullion.

Concerns around Stagflation dominate the 2026 economic landscape. Inflation remains stubbornly above the 2% target, remaining near 2.7%–2.8%, while expansionary fiscal policies and tax cuts are propping up growth.

Historically, gold has thrived when the Fed was perceived as "behind the curve." If the FOMC statement acknowledges that inflation progress has stalled but refuses to hike rates (due to growth risks), it reinforces gold's status as the ultimate inflation hedge.

Unusually for an FOMC meeting, non-monetary factors are heavily influencing the "Fed premium" in gold prices. The recent legal and political challenges to the Fed’s independence (including the Supreme Court's scrutiny of Governor Lisa Cook's removal and investigations into Chair Powell) have fueled concerns about the Fed’s independence and its potential impact on future interest rates. Investors are using gold as a hedge against a potential "politicization" of the dollar. Any rhetoric in the Jan 28th statement that hints at defensiveness toward the Fed’s autonomy could actually spike gold prices as a vote of no confidence in the USD. Major banks (Goldman Sachs, J.P. Morgan) have already raised 2026 targets to $5,000–$5,400, suggesting that as long as the Fed doesn't pivot back to aggressive hiking, the path of least resistance for gold remains upward.

With all that said, will this price rally continue? We will go over different technical analysis tools and indicators, as well as the most recent COT report released on January 16th, 2026, including data up to January 13th, 2026

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Managed money (Large speculators): Trend followers

Unlike previous peaks where speculators were "over-extended," the current net-long level is not yet at a historical sentiment extreme. Although this suggests there is more room to the upside regarding long positions, and they haven't yet reached the "exhaustion" point that usually precedes a major crash, a negative divergence may be in play as price makes higher highs while long positions are plotting lower highs.

Swap dealers: Market makers and hedgers

In contrast to the managed money category, swap dealers, who typically take the other side of the market, have already reached their all-time extreme short level, suggesting a change in sentiment may be due.

​Small speculators: Growing participation

There is a noticeable uptick in net long positions from small speculators in early 2026. This indicates that "main street" investors are increasingly entering the market, often in the final stage of a significant price surge.

Open interest and volume

Although open interest remains high, it is showing a potential negative divergence with price action. Similar to OI, non-trending low volume is also seen along with price appreciation as of November 1st, 2025, which theoretically means that volume was not supportive of the price increase since Nov 1st

• The daily chart shows a strong, long-term bullish trend that accelerated significantly in 2026. After a period of consolidation in late 2025, the price has broken out to the upside, currently trading near 4,900.00.
• As of early 2025, the gold price traded within a widening, rising channel, as indicated by the blue lines on the chart above. The "higher highs and higher lows" structure is well-defined, with the upper channel boundary intersecting with monthly R3 at 4913.58, forming a confluence of resistance.
• As of late October 2025, following a negative divergence with the RSI that preceded a $200 drop, gold prices rose back up, erasing the drop, breaking above its fast EMA9, the monthly PP of $4345.22, and the baseline of multiple higher lows, as marked by the red lines on the chart.
• A confluence of support lies beneath the price action, represented by the intersection of the EMA9, the breakout level (red line), and the newly formed price gap near $4630.00. The price gap may suggest an island formation; however, that’s yet to be determined.
• RSI (14) is currently at 78.00, indicating the asset is in overbought territory. A potential negative divergence remains between price and RSI.
• ​Stochastic (14, 1, 3): The Stochastic oscillator is also highly elevated (87.90), confirming strong bullish momentum but suggesting that a short-term “cooling off” period or minor retracement toward the EMA may be imminent.