(Kitco News) – Gold prices will likely follow oil’s lead in the near term as geopolitics dominates the early days of 2026, and while the market could see some price moderation in January as commodities indices rebalance, the overall trend remains higher, according to the World Gold Council (WGC).
In their latest Weekly Markets Monitor, WGC analysts noted that gold pulled back during the final week of 2025, with the LBMA Gold Price PM falling 2% week-over-week, but still finishing up 67% in 2025, its strongest performance since 1979.
“Gold’s pullback may be related to year-end portfolio re-balancing amid its impressive rally in 2025 as well as potential profit taking, which cooled gold’s momentum,” they wrote. “During the recent week, global gold ETF inflows slowed as the gold price retreated, whilst net longs at the Shanghai Futures Exchange also declined.”
“Gold has reversed its move to new record highs, and with weekly momentum turning lower, a fresh consolidation looks likely to emerge, but with the core trend still seen higher.”
The analysts said the weekend’s military action against Venezuela shows that geopolitical instability will likely continue to be a key driver for gold demand and price action this year, as it was in 2025. “Yet the impact on gold in the medium-term isn’t so clear with the US increasing efforts to strengthen its petro-dollar status,” they wrote. “Oil prices are on everyone’s radar today, but social media is awash with commentary on how increased output is years and billions of dollars away. To boot, Brent and WTI futures positioning is very short. Oil and the US dollar could be key to gold’s moves this week.”
The WGC also said investors should stay on top of developments at the U.S. Federal Reserve in 2026 – both personnel and rates.
“Although key data releases, including the December US payrolls and PMIs, may move investor anticipation of future rate cuts, the new Fed chair candidate – not announced by Trump yet – may feature more heavily in this matter,” the analysts said.
And after gold’s strongest annual performance in 46 years, the rebalancing of commodity indices is another key area to watch. “Major commodity indices need to sell a portion of their gold holdings based on the end-2025 price and their 2026 weight targets, potentially creating some turbulence in the short term,” they wrote.
Turning to the technical picture, WGC analysts said the “aggressive run higher” in both gold and silver was abruptly reversed at the end of December.
“With weekly RSI momentum showing a negative divergence (lower panel above) and with daily MACD momentum also crossing lower this suggests an 'exhaustive peak’ is likely in place for now and a consolidation phase can emerge,” they said. “Consolidation, though, if indeed seen, will be viewed as a temporary pause in the core uptrend, and we would note that resistance from the October/November “triangle” pattern remains seen above US$4,700/oz.”
“Support is seen initially at the 38.2% retracement of the rally from late October at US$4,297/oz,” the analysts noted, “a sustained move below which would be seen to add weight to this view with support then seen next at what we would look to be better support at the rising 55- day moving average, currently at US$4,185/oz, where our bias would be to look for a better floor.”
“Resistance is seen initially at US$4,474/oz back above which would be seen to open the door to a fresh look at the late 2025 high at US$4,550/oz.”
Gold is continuing to trade within $10 of the session high set shortly after the release of worse-than-expected ISM Manufacturing for December at 10 am EST on Monday morning.
Spot gold last traded at $4,445.10 per ounce for a gain of 2.61% on the daily chart.
