Trump's Recent Decision Eases Trade Fears; Gold Retreats from Record Highs

Ultima Markets Daily Market Insights - January 22, 2026

What began as a sudden geopolitical shock has unwound just as quickly. At the World Economic Forum in Davos, President Trump announced the suspension of proposed tariffs on European allies after reaching a new Arctic Security Framework with NATO. The decision effectively draws a line under the recent Greenland-related tensions.

Markets responded immediately. With trade-war risks taken off the table, risk appetite returned sharply, driving equities higher while the fear premium embedded in safe-haven assets faded.

Market Sentiment: Relief Takes Over

Global markets have pivoted from heightened trade-war concerns to cautious optimism. Trump confirmed that tariffs are suspended and military action is not being considered, removing a major tail risk from the macro outlook.

U.S. Equities reacted decisively. The S&P 500 and Nasdaq rose more than 1.5 percent, recovering earlier losses, with large-cap technology stocks leading the rebound. Investors are once again pricing a soft-landing scenario without the drag of additional trade restrictions.

Outlook

Asian and European markets are likely to follow the U.S. lead, with dip-buing expected in major indices such as the DAX and Nikkei as capital rotates back into risk assets.

Asset Rotation: From Safety Back to Risk

The removal of tariff threats has triggered another swift market rotation. Over recent sessions, capital has moved out of defensive positions and back into growth-oriented assets. For now, the bias favours equities, while traditional safe havens remain under pressure.

Gold Outlook: Correction Underway

Gold retreated sharply from its record high near $4,880, falling more than $50 within hours and extending losses during the Asian session. The pullback reflects the rapid unwinding of the geopolitical risk premium that has supported prices.

With Gold now trading below the $4,800 level, this zone becomes the immediate battleground. Sustained pressure below this threshold would increase the likelihood of a deeper correction toward the $4,690 - $4,700 support area.

Outlook

Watch the $4,800 level closely. A decisive break could trigger further liquidation as risk sentiment stabilises.

US Dollar Outlook: Direction Still Unclear

The US Dollar continues to trade without a clear trend. It failed to attract safe-haven demand during the recent risk-off phase, partly due to US involvement in the geopolitical narrative. Now, the return of risk appetite may also weigh on the US Dollar as capital rotates elsewhere.

Technically, the USD Index remains range-bound around 98.50. Resistance is seen near 98.80 - 99.00, while support remains at 98.00.

Outlook

The next directional move is likely to be driven by incoming US data. How price behaves around the 98.50 level will be key.

What to Watch Today

• US GDP (Q3 Revised) and Jobless Claims (8:30 AM ET): While backward-looking, stronger data would reinforce US economic resilience and help keep Treasury yields supported.
• US PCE Inflation Data: With trade risks easing, attention shifts fully back to the Fed. A softer PCE print would support rate-cut expectations, pressuring the Dollar and potentially offering some support to Gold.
• Intel (INTC) Earnings (After Market Close): Results will be closely watched as a gauge of chip-sector and AI-related demand. A strong report could extend the Nasdaq 100 rebound, while a miss may dampen the relief rally.

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