Article by: ETO Markets

Gold prices (XAU/USD) have regained some positive traction following a profit-taking pullback from a five-week high near $…, although the rally lacks strong follow-through buying. Geopolitical risks, such as the Russia-Ukraine war and tensions in the Middle East, along with concerns over US President-elect Donald Trump's tariff plans, continue to boost safe-haven demand for gold. Additionally, expectations that the Federal Reserve (Fed) will implement a third consecutive rate cut at the end of the December policy meeting provide some support for the non-yielding metal. However, the upside for gold is limited by expectations that the Fed will take a more cautious approach to interest rate cuts, as progress in lowering inflation to its 2% target has stalled. This outlook, combined with rising US Treasury bond yields, strengthens the US Dollar (USD), helping it maintain its gains and capping gold’s price potential. Traders are likely to remain cautious ahead of the upcoming two-day FOMC policy meeting, where further direction on US monetary policy is expected. 

From a technical standpoint, if gold prices (XAU/USD) rise above the $… level, they are likely to encounter resistance around the $… region, which marks the monthly high reached on Thursday. A sustained move above this level could push prices towards the $… intermediate resistance. If surpassed, prices may aim for the all-time high near $… from October. On the downside, the $… range has become a key support area. A break below this support could trigger technical selling, opening the door for further declines towards the $… zone, where the 50-period Simple Moving Average (SMA) on the daily chart converge. If this level is broken decisively, gold prices may weaken further, targeting the $… region, followed by the psychological $… mark.