Gold's bull market foundation is solid, and a jump on the first Gold / U.S. DollarFOREXCOM:XAUUSDmkik8556Gold's bull market foundation is solid, and a jump on the first trading day of 2026 demonstrates a strong return. On Friday (January 2nd), the first trading day of 2026, gold and silver opened higher in early Asian trading, strongly kicking off the new year. Spot gold fluctuated upwards, currently trading around $4053, with a daily increase of approximately 0.68%; spot silver was even more aggressive, rising 1.6% to around $72.64 per ounce. This early morning surge seems to be a continuation and declaration of the glorious rally in 2025—over the past year, gold's cumulative increase reached approximately 64%, not only marking its strongest performance in recent years but also its largest annual increase since 1979, a spectacular market event unseen in 46 years. Looking back at 2025, gold soared from a relatively low level at the beginning of the year, repeatedly breaking historical highs and attracting the attention of global capital. Although a technical correction occurred at the end of the year due to factors such as exchange margin adjustments and tightening liquidity, it was more like a period of consolidation and market correction, not a trend reversal. The gap-up opening on the first trading day of the new year has initially confirmed that market bullish confidence is still building. The Logic Behind the 2025 Surge: Multiple Positive Factors Resonate, Laying the Foundation for a Bull Market Gold's epic surge in 2025 is the result of a confluence of fundamental, capital, and sentiment factors: First, the shift in monetary policy provides the core impetus. The Federal Reserve has begun a rate-cutting cycle, with key interest rates gradually decreasing, leading to a significant decline in US Treasury yields. The 10-year US Treasury yield saw its first annual decline since 2020, significantly reducing the opportunity cost of holding non-interest-bearing assets like gold, and significantly increasing the willingness of funds to flow into gold. Second, ongoing geopolitical conflicts fuel continued risk aversion. The escalating situation in Russia and Ukraine, and instability in many global hotspots, have strengthened gold's strategic position as the ultimate safe-haven asset. In a market shrouded in uncertainty, gold has become a natural haven for funds seeking refuge. Third, central bank gold purchases build a solid buying base. Central banks around the world continue to increase their gold reserves to diversify their assets and hedge against inflation and geopolitical risks. With the exception of a very few central banks selling gold due to special needs, global central banks as a whole remain strong net buyers. This structural and long-term demand provides solid support for gold prices. Fourth, investment demand surged, and liquidity was abundant. Investment instruments such as gold ETFs attracted significant inflows, further boosting market activity and price elasticity. These intertwined factors combined to create a 64% annual increase in gold prices, laying the groundwork for the market trend in 2026. Technical Analysis: Gap Up Shows Strength, Pay Attention to Support and Resistance Conversions From a daily chart perspective, gold has formed a key support area around $4305. Multiple pullbacks have been met with buying support, indicating strong technical significance at this level. The moving average system remains in a bullish alignment, the RSI has stabilized from the neutral zone, and the MACD histogram is contracting, indicating gradually weakening downward momentum. The gap up opening this morning reflects positive bullish sentiment, but attention should be paid to whether the gap will be filled during the day. On the 4-hour chart, the stochastic oscillator is showing a golden cross, indicating continued upward momentum in the short term. The primary resistance level to watch is around 4380, which coincides with the upper edge of the recent trading range and also the upper Bollinger Band on the weekly chart. A break above this level would open up further upside potential. The key support/resistance level is the 4400-4430 area; a hold above this level would further strengthen the trend. In summary, gold performed strongly on the first trading day of 2026, and the technical structure remains bullish. Trading strategy should focus on buying on dips, and shorting with small positions if resistance is encountered on rallies. Key resistance is the 4400-4430 area, while key support is the 4305-4320 area. Be aware that volatility may increase after the holidays; therefore, strict position sizing, setting stop-loss orders, and avoiding blindly chasing highs and lows are crucial. Looking ahead to 2026: The bull market continues, and $5,000 may not be the end. While short-term market volatility may occur due to factors such as liquidity and policy adjustments, the fundamental positive outlook for gold in the medium to long term remains unchanged. The core logic of central bank gold purchases, geopolitical risks, and expectations of looser monetary policy still holds true. Many believe that gold could challenge $5,000/ounce in 2026, and silver may reach $100/ounce. Even if a pullback to around $3,800 occurs, it would be a normal correction within a bull market. Today, the first trading day of 2026, the strong performance of gold and silver may have set the tone for the year's trend. A weekly close above high levels would further solidify the bullish pattern. For investors, while being wary of liquidity risks, it is even more important to seize every opportunity to buy on dips. The gold market wrote a glorious chapter in 2025; in 2026, this structural bull market for precious metals seems to be just entering an even more exciting chapter. Trading Strategy Reference: Short Trading Opportunity: Consider a small short position in the 4400-4405 area, with a stop loss at 4430 and a target of 4380-4350. A break below this level could lead to 4330. Long Trading Opportunity: Consider a long position in the 4325-4330 area, with a stop loss at 4300 and a target of 4370-4400. A break above this level could lead to 4430.