Article by: ETO Markets
Gold prices (XAU/USD) dropped over 3% on Monday, erasing much of last week’s gains, amid optimism over Scott Bessent’s nomination as US Treasury Secretary and reports of a potential Israel-Hezbollah ceasefire, which fueled risk-on sentiment and overshadowed a weaker US Dollar. However, the decline halted near $2,625 on Tuesday as safe-haven demand revived following US President-elect Donald Trump’s tariff threats. Mixed signals from Federal Reserve officials and scaled-back expectations for a December rate cut added volatility, with higher US Treasury bond yields and USD strength likely capping gold's upside. On the other hand, heightened geopolitical tensions in Gaza and Lebanon, along with concerns over Trump’s tariff policies, increase the supported gold demand. Market focus now shifts to FOMC meeting minutes, US Q3 GDP revisions, and the PCE Price Index for clues on future Fed policy and USD direction.
From a technical perspective, gold price bounce from the previous Monday drop and hovered near $… facing strong resistance at the $… zone. This area, marked by the 100-period SMA is a pivotal point; sustained movement above it could spark a short-covering rally towards $… and the recent swing high near $…-…. On the downside, the $… level remains critical support, with a break exposing the 100-day SMA around $…. Further declines could target the monthly low at $…-…, with a decisive breach signaling a deeper bearish move and a continuation of the retracement from October's all-time high of $….
