Gold (XAU/USD) Price Forecast: Will Trump’s Greenland Deal Cool the Rally?
By James Hyerczyk | Updated: January 22, 2026, 04:06 GMT
Gold prices have surged dramatically in recent days, reaching an unprecedented high driven largely by geopolitical developments centered around U.S. President Donald Trump’s interest in acquiring Greenland. This rally, however, faces new uncertainty following a tentative deal framework announcement, raising questions about the sustainability of gold’s recent gains.
Gold Hits All-Time High Amid Greenland Geopolitical Tensions
Spot gold spiked to a record $4,888.55 on Wednesday, fueled by a surge in safe-haven demand after President Trump publicly expressed his intent to negotiate for Greenland, stirring geopolitical anxieties. The complex situation around Greenland—considered a strategic asset—coupled with a weakening U.S. Dollar and an advantageous gold-to-silver ratio, compounded buying interest among traders. Some market participants were driven by Fear of Missing Out (FOMO), propelling prices closer to an ambitious target of $5,000 an ounce.
However, by the end of the trading session, gold pared back nearly half of its session gains. Trump’s decision to step away from aggressive tariff threats and indicate progress on a NATO-backed deal framework for Greenland tempered investor fears and led to profit-taking. Gold finished the day up $68.01, or 1.43%, settling at $4,831.38. —
Trump’s Davos Appearance: From Bold Claims to Negotiations Without Force
During his address at the World Economic Forum in Davos, Switzerland, President Trump began on a confident note, touting his administration’s achievements. However, the tone shifted when he announced an intent to resume discussions on the U.S. acquisition of Greenland. Crucially, Trump emphasized that military force would not be used to obtain the territory—a statement that eased tensions and gave markets pause.
This revelation sparked an initial pullback in gold prices, as some investors seized the opportunity to lock in profits, reducing speculative exuberance tied to fears of conflict or trade wars linked to Greenland.
Dollar Volatility and Gold/Silver Ratio Impact the Price Swings
The U.S. Dollar Index (DXY) displayed softness earlier in the day, partly pressured by anti-U.S. sentiments related to Trump’s Greenland maneuvering. Because gold is priced in U.S. dollars, the currency’s fluctuations amplified gold’s volatility throughout the session. As the dollar recovered when military action was ruled out, gold adjusted downward.
Additionally, attention has been on the Gold/Silver ratio, which recovered from a low of about 50 to roughly 52.5. This ratio—often interpreted as a gauge of precious metal valuation—had shown signs of being oversold following a decline from its November peak above 82. —
What Lies Ahead: Will the Greenland Deal Erase the Tariff Premium?
The rally seen earlier in the week appeared largely driven by FOMO as speculative traders chased an anticipated breakout above $5,000. Now, with preliminary agreement outlines in place and key tariff threats withdrawn, the gold market faces the possibility of retracing some gains.
If the so-called "Greenland Tariff" premium charged by earlier market jitters is unwound, prices might retreat to last Friday’s closing level near $4,596.32. This would represent a significant correction, testing important support zones around $4,712.52 and the uptrend line near $4,631.93. While a correction of this magnitude signals profit-taking and headline-driven volatility, long-term bullish trends in gold are expected to remain intact, barring further geopolitical escalations or significant economic shifts.
Traders must closely monitor upcoming developments on the Greenland situation as well as broader macroeconomic indicators. Whether a formal Greenland deal announcement will exert greater bearish pressure or simply sustain a plateau remains a central focus in the gold market.
About the Author
James Hyerczyk is a seasoned U.S.-based technical analyst and market educator with over 40 years of experience. Specializing in chart patterns and price action, Hyerczyk is the author of technical analysis books and has extensive expertise in futures and stock markets.
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This article is for informational purposes and does not constitute financial advice. Please consult a professional before making trading decisions.