Gold Price Forecast – Geopolitical Shocks and US Dollar Weakness Drive Surge Toward $5,400

Gold (XAU) is nearing the $5,000 mark, fueled by political shock and distrust between world powers. The comments by President Trump in Davos shook long standing alliances and moved investors towards hard assets. In my opinion, this change in flow of trust and capital around the world helps to lay the groundwork for gold to breach $5,400 in the near future. This article presents the key geopolitical factors, market signals and technical levels behind this outlook.

Global Shifts Fuel Flight to Gold

Geopolitical Tensions Renew Gold’s Appeal

The gold market is responding to a profound change in the world’s politics. After President Trump returned from Davos, the headlines were all about Greenland, but the real story was what was being done to alliances. His remarks discomfited European leaders and raised some doubts on trust in the alliances. Markets may have calmed for a moment, but major break is taking place under the surface.

Alliances are founded on rules and common values. When those rules break down, uncertainty increases. Investors respond by moving to assets that don’t depend on trust between governments. Therefore, the gold price is getting strong attention by moving into parabolic trend.

Dollar Weakness and Central Banks Drive Gold Flows

The impact of these political events is observed on financial markets. The US dollar dropped lower within a strong bearish structure and broke the key level of 98. The capital is flowing out of the US and moving into the Euro and Japanese Yen. This environment is supportive of the gold market due to confidence in US leadership and stability.

At the same time, there are actions from central banks. Poland said it wants to build up gold reserves to reach 700 tonnes to join world’s top ten holders. Countries want assets that cannot be frozen or politicized.

The chart below shows that Chicago Fed’s financial conditions index dropped to levels not seen since 2021. Despite the easy financial conditions, the markets are moving into risk-off mode. The gold price gains momentum during high liquidity but low trust.

These geopolitical market conditions are not the temporary noise. These conditions indicate long term trend in favor of gold.

Gold Breaks Out with Momentum Toward $5,400

The weekly chart below shows that the gold market has induced strong surge in 2026 after breaking key level of $4,400. This breakout was important due to the formation of the ascending triangle pattern.

The ascending triangle pattern was previously formed from April to August periods of 2024 and 2025 which resulted in a price gain of $900/ounce to $1000/ounce. The breakouts from this triangle were developed in August 2024 and 2025.

However, the formation of the ascending triangle patterns this time was very short. The breakout was explosive and highlights strong momentum. The price is now approaching $5,000 psychological level and looks to break higher.

Based on previous projections, if the gold market gains around $900 to $1,000 per ounce from the $4,400 breakout, the price will likely reach $5,400 level in the short term. Therefore, the recent momentum on the weekly chart shows continued upside potential during next week.

Key Market Signals Confirm the Bullish Gold Trend

US Dollar Breakdown Signals More Upside for Gold

The strong weakness in the USD Index is observed on long term monthly chart, which highlights the strong consolidation between the $96 to $100 level. The price has been under pressure below 100.50 pivotal level and the last three monthly candles show strong bearish pressure. Based on this setup, the price will likely break below 96 pivotal level.

The breakout from the 96 pivotal level will induce strong drop in the USD Index toward 90, which was seen during the lows of January 2021. This drop in the USD Index will likely introduce another buying pressure in the gold market that may take the gold price toward the $6,000 level in a very short span.

Falling Ratio Signals Silver-Led Strength in Precious Metals

The gold-to-silver ratio shows a strong breakout from the rising trendline from the 85 level in Q2 2025. This drop from 85 level has triggered a strong drop in gold to silver ratio, which has the potential to move toward the 30 level.

This drop in ratio indicates a strong upside move in silver (XAG). The strong upside move in silver indicates that gold will likely follow the precious metals rally. When the silver leads the precious metals rally, it indicates overall strength in the precious metals sector.

This bearish pressure and the drop toward the 30 level in ratio indicate further upside in the gold and silver market, with silver likely to multiply its gains by a big factor.

Final Words

Gold breakout above $4,400 indicates a move to $5,400 level. This move is fueled by an obvious breakdown in global trust, growing geopolitical tensions and capital rotation away from the US dollar. Central banks are adding to gold reserves and financial markets are in risk-off mode despite ample liquidity.

In my opinion, these drivers are not transitory. They point to long-term structural shift to favor gold over paper assets. The gold price is looking for a move to $5,400 and a break above this zone will initiate a move towards $6,000.

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