Gold Price Forecast – Fed Chair Nomination Triggers Reset Before Next Rally

Gold (XAUUSD) price received sharp volatility after President Trump named Kevin Warsh as the next Federal Reserve Chair. This news triggered a sudden shift to risk‑off across markets. In my view, this pullback reflects a reset after an extended rally rather than a change in broader trend. This article presents macro backdrop, market reactions and key technical levels shaping the next move in gold.

Market Reset Triggered by Fed Nomination

Warsh Pick Sparks Sharp Reaction in Gold and Silver

The news that President Trump has selected former Fed governor Kevin Warsh as the next Federal Reserve Chair calmed financial markets for a short period. Warsh is perceived as a conservative pick which provided a sense of stability to investors after months of speculation. That relief caused a quick change in positioning, particularly in gold and silver (XAG). The market reacted sharply. Gold dropped over 10%, silver collapsed over 30% and copper stocks, uranium and critical materials received double-digit losses.

The precious metals rally had been stretched on increasing demand from global instability and long-term structural trends. Warsh’s nomination was a release valve. A blowoff like this resets the market for the next move. The long tail on Friday candle of gold and silver indicates that buyers are still there.

A Conservative Fed Chair Can’t Solve Structural Risks

The bigger question now is what kind of Fed Chair Warsh is going to be. While his record indicates a preference for tighter policy, there’s some uncertainty about whether he’ll buck political pressure. Trump’s comments on Jerome Powell have already caused some concerns about the independence of the Fed. Therefore, Warsh may start out more hawkish than markets expect.

However, the Fed just can not fix it all. It would not calm the fiscal volatility. There is no monetary policy which can produce seven critical metals needed for military manufacture.

Even so, the Fed just can’t fix it all. It won’t calm fiscal volatility. And no monetary policy can produce the seven critical metals needed for military manufacture. That was made clear again when U.S.-China Busan summit ended with China agreeing to suspend export controls on rare earths – but staying mum on defense grade materials.

Based on above discussion, this correction does not constitute a trend change but a reset. The world continues to be short of supply, geopolitical tension and demand of hard assets in the long term. Central banks are still net purchasers of gold and once global trust is lost, it does not come back in a day. It is not the reaction of the headline that is important at this point, but what comes after it.

Gold Technical Structure Still Intact Despite Selloff

As per our previous discussion, gold prices hit target of $5,400 after breaking from ascending channel pattern, as shown in the chart below. The chart shows that the gold market has been trading within a structural bullish pattern since 2024.

The formation of ascending triangles during March to August 2024 has sparked a rally to produce a high in April 2025. Then the consolidation between April and August 2025 sparked another rally to produce a high in October 2025.

However, the consolidation from October to December 2025 was quick and produced a shorter ascending channel pattern. The short ascending channel pattern indicated a quick move after the break of $4,400.

Therefore, the break from $4,400 has sparked another $1,000/ounce move toward $5,400. However, this time the target of $5,400 was breached, and gold produced a high of $5,600. After hitting this target, the price quickly dropped, producing a historic one-day decline to a low of $4,679.50 on Friday.

This indicates strong volatility and suggests that the correction from $5,600 may introduce another consolidation pattern above the $4,400-$4,600 support. However, a break below $4,400 may introduce further downside to $4,000.

Based on this discussion, the drop on Friday does not change the bullish structural outlook, as long as the price remains above $4,000. Instead, this event indicates a healthy correction before the next surge in gold.

Key Market Signals Supporting the Gold Outlook

US Dollar Bounce Adds Short-Term Uncertainty

The uncertainty in the US dollar market after President Trump appointed the Fed pick is also observed in the US dollar market, as the US dollar produced a low at 95.50 in January 2026 and induced a rebound back towards the resistance of 97.

As per our previous discussion, the US dollar has broken the 96 level, but the rebound from the low of 95.50 during the last day of January 2026 has increased uncertainty.

A recovery above 100.50 may introduce a strong rebound in the US dollar market which may introduce further consolidation in gold and silver. However, a break below 95.50 will indicate a strong and quick drop in US dollar towards the 90. Overall, this consolidation around the long-term support does not change the bearish structure in US dollar.

Silver May Lead Again if Ratio Breaks Support

Another reason for the strong correction in gold and silver was the gold-to-silver ratio, which hit minor support at 45 on Friday. After hitting this support, the index rebounded toward resistance of 64, which was previously broken down.

This rebound does not change the bullish structure of gold and silver. However, this rebound has increased the uncertainty in both metals in the short term.

A break below the 45 level in the ratio will introduce another surge in the silver market and further upside in both metals. However, the major support at 30 in the index remains a critical level, where silver may start to produce a short-term top when the ratio is around 30.

Gold-Platinum Ratio Sends Warning Across Metals

It is interesting to note that when gold price marked strong resistance at $5,600, the gold-to-platinum ratio also hit long-term support at 1.80.

After hitting this support level, the ratio induced a strong rebound back to close above 2.20. This strong rebound has created a strong plunge in the platinum market and sent critical signals to the metals sector.

The strong reversal candle in January 2026 indicates that the gold market may continue to lead the platinum (XPL) and palladium (XPD).

In Closing: Correction Sets the Stage for Next Gold Rally

The strong correction in gold last week from $5,600 does’t change the broader bullish structure in precious metals. However, this correction presents a reset in the bullish trend. The Warch nomination provided a temporary relief in precious metals, but fiscal instability, geopolitical uncertainty and long-term supply risks remain the key concerns. Therefore, this correction will offer support and prepare for next rally. However, investors must be careful in the short term and allow the dust to settle before entering the market. As long as the gold remains above $4,000, the bullish trend remains strong.

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