Article by: ETO Markets

Gold prices (XAU/USD) rose for a third day, benefiting from safe-haven demand triggered by rising geopolitical tensions between Russia and Ukraine, while a weak dollar also provided some support for gold. However, a rebound in U.S. Treasury yields and comments from Federal Reserve officials limited further gains for gold. Gold's gains may face resistance as investors focus on signals from the Federal Reserve on the path of future rate cuts. At the same time, market concerns about inflation caused by potential fiscal policies after Trump's election, including tax cuts and tariffs, may lead the Federal Reserve to maintain higher interest rates, supporting the dollar and weighing on gold. In addition, market expectations for a 25 basis point rate cut by the Federal Reserve in December have fallen below 60%, according to CME Group's FedWatch tool, indicating that weakening expectations of rate cuts may be unfavorable for gold.

From a technical perspective, gold prices rebounded from the two-month low hit last week and broke through the 38.2% Fibonacci retracement level of the recent correction around $…, supporting the bullish outlook. Oscillators on the hourly chart also show bullish momentum, suggesting that gold prices may rise further, targeting the $…-$… area, followed by the $…-$… resistance zone. A break above these resistance levels may trigger further long-covering moves, targeting the $… psychological level.

On the downside, the $…-$… area is an initial support, and a break below it may lead to a retest of the $… round number. A further break below $… may accelerate the decline towards the 100-day simple moving average (SMA), currently located in the $… area. The lower support level is at last week’s low of $…-$…. If it falls below this level, it will trigger a new round of selling, and the target may be a deeper correction.