Gold Price Holds Near $2,670; Short-Term Bullish Momentum Intact

Gold (XAU/USD) maintains its positive tone in Tuesday’s Asian session, hovering near a two-week high of $2,670 touched the previous day. However, the metal lacks strong follow-through buying as the US Dollar (USD) remains supported by expectations that US President-elect Donald Trump’s policies could fuel inflation and lead the Federal Reserve (Fed) to reconsider its rate-cutting trajectory.

While these factors limit Gold’s upside, safe-haven demand driven by geopolitical tensions and renewed central bank purchases, particularly by China, provide a solid foundation for the metal’s bullish bias.

Factors Supporting Gold Prices

Geopolitical Tensions:
The ongoing conflict in the Middle East has escalated, with Syrian rebels forcing President Bashar al-Assad to flee to Russia. This turmoil continues to drive demand for safe-haven assets like Gold.
Central Bank Buying:
The People’s Bank of China resumed Gold purchases in November after a seven-month hiatus, buying 160,000 fine troy ounces. This development highlights ongoing central bank interest in the precious metal, offering additional support to prices.
Trade War Concerns:
President-elect Trump’s tariff threats against major trading partners, including Mexico, Canada, and China, and his proposal for 100% tariffs on ‘BRICS’ nations, have reignited fears of a global trade war, further boosting Gold’s safe-haven appeal.

Headwinds for Gold

Fed Policy Outlook:
While the CME Group’s FedWatch Tool shows an 85% probability of a 25-basis-point rate cut at the Fed’s December meeting, hawkish comments from Fed officials and expectations of inflationary pressures could prompt the central bank to pause its rate-cutting cycle.
Rising US Treasury Yields:
After Friday’s dip to the lowest levels since October 18, US Treasury yields rebounded overnight. This recovery supports the USD and dampens demand for non-yielding assets like Gold.
Upcoming US CPI Data:
Traders are awaiting Wednesday’s US Consumer Price Index (CPI) release, which could influence the Fed’s policy direction and significantly impact Gold prices.

Technical Outlook: Key Levels to Watch

Upside Potential:
Gold faces immediate resistance near the recent high of $2,675-$2,680. A sustained break above this zone could target the next levels around $2,700 and $2,720, potentially extending toward the $2,750 psychological mark.
Downside Risks:
On the downside, initial support is at $2,650, with stronger support near $2,630-$2,620. A break below this region could expose Gold to a deeper pullback toward the $2,600 mark.

Outlook

While Gold’s short-term bullish bias remains intact, the metal’s trajectory will likely hinge on Wednesday’s US CPI data and the broader implications for Fed policy. For now, geopolitical uncertainties and central bank activity should continue to underpin prices, keeping XAU/USD well-supported above key levels.