Gold prices (XAU/USD) maintain a positive bias, staying close to a two-week high. The precious metal continues to be supported by a mix of geopolitical risks, softer US Dollar movements, and expectations of a Federal Reserve rate cut this month. As the Russia-Ukraine conflict deepens and political turmoil spreads in South Korea and France, safe-haven demand for gold remains robust. Moreover, China’s resumption of gold purchases adds another layer of support for the yellow metal.
The expectation of a Fed rate cut in December further weakens the US Dollar, allowing gold to shine. With US Treasury bond yields remaining subdued and market participants pricing in a significant chance of lower borrowing costs, the pressure on the USD continues to build. While geopolitical tensions and inflationary fears, especially related to President-elect Donald Trump’s tariff policies, boost demand for gold, the US Dollar remains under pressure amid this uncertainty.
Geopolitical unrest in the Middle East, where Syrian rebels have taken control, drives more haven flows into gold. Furthermore, the People’s Bank of China recently announced its purchase of 160,000 fine troy ounces of gold in November, which added bullish momentum to the metal. Expectations for a December Fed rate cut continue to support gold’s rally, although some traders remain cautious due to a potential shift in the Fed’s policy stance.
Looking at the technicals, gold’s recent breakout above the $2,650 level indicates further upside potential. Daily chart indicators are showing positive momentum, suggesting that gold may continue to rise towards the $2,700 mark, possibly testing the $2,720-$2,722 supply zone. Traders will need to monitor the $2,650 resistance, which could act as a key support level if gold retreats before testing higher resistance.
