Gold Price Edges Higher, US Bond Yields Weaken

Gold prices (XAU/USD) begin the week on a positive note, maintaining modest gains through the early European session. The decline in US Treasury bond yields to their lowest level since October, driven by expectations that the Federal Reserve may cut borrowing costs again in December, is supporting the metal. Additionally, political instability in South Korea, rising geopolitical tensions, and fears of a trade war are boosting demand for the safe-haven asset.

Investors are increasingly convinced that the US central bank will adopt a less dovish approach, fueled by expectations that US President-elect Donald Trump’s expansionary policies will drive inflation. This is supporting the US Dollar (USD) as it rebounds from a near one-month low, which, in turn, keeps gold below the $2,650-2,655 resistance zone. Market participants are also cautious ahead of this week’s US consumer inflation data. Gold is currently testing a short-term trading range resistance near $2,650-2,655.

From a technical standpoint, a further rise above the $2,648-2,650 resistance zone may face additional hurdles near $2,666. A sustained move above the $2,672 level would signal more buying momentum and push gold toward the $2,700 mark. The next significant resistance level is around $2,722.

On the downside, if gold falls below the immediate support level of $2,630, it could move towards the $2,614-2,613 range, followed by the $2,605-2,600 support zone and the 100-day Simple Moving Average (SMA) around $2,586-2,585. A break below this level could lead to further declines, potentially reaching the November swing low near $2,537-2,536.

Paraphrasing text from "FXSTREET" all rights reserved by the original author.