Gold Remains Bid Amid Geopolitical Risks and Dovish Fed Expectations

Gold (XAU/USD) remains supported as it heads into the European session on Tuesday, staying just below a two-week high reached the previous day. The ongoing Russia-Ukraine conflict, along with political instability in South Korea and France, continues to drive safe-haven demand for the precious metal. Additionally, China’s central bank resuming gold purchases after a seven-month hiatus provides further momentum to gold prices.

Further supporting gold is the decline in US Treasury bond yields, as market expectations rise that the Federal Reserve (Fed) will cut interest rates this month, keeping the US Dollar (USD) under pressure. This, combined with concerns about US President-elect Donald Trump's tariff policies, suggests that gold's outlook remains positive, although any shift toward a less dovish Fed could limit further gains.

Gold is on track to surpass the $2,700 mark and potentially test the $2,720-2,722 resistance zone. Technically, the recent breakout above the $2,650 level, along with a daily close above it, serves as a bullish signal. Oscillators on the daily chart are showing positive momentum, supporting the outlook for further price gains. Thus, gold could move towards the $2,700 level and challenge the $2,720-2,722 zone.

On the downside, the $2,650 level, which aligns with the 200-period Exponential Moving Average (EMA) on the 4-hour chart, now serves as key support. A break below this level could expose further downside towards the $2,625-2,620 region, potentially followed by a move to $2,600. If the price falls below the 100-day Simple Moving Average (SMA) around $2,590-2,585, it could open the door for deeper losses, targeting the November swing low near the $2,537-2,536 zone.

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