Gold Price Analysis: Stays above $2,600 as focus shifts to Fed minutes
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Gold prices (XAU/USD) remain under pressure, trading just above $2,600 during Tuesday’s European session. The yellow metal struggles to recover from a one-week low, weighed down by rising US Treasury yields and expectations of a less dovish Federal Reserve (Fed). Optimism surrounding geopolitical developments and Scott Bessent’s nomination as Treasury Secretary further dampens safe-haven demand.
Market dynamics suppressing gold
Gold’s appeal continues to wane as market participants price in the likelihood that President-elect Donald Trump’s fiscal expansion policies will reignite inflation, constraining the Fed’s ability to cut rates aggressively. The benchmark 10-year US Treasury yield has rebounded sharply, undermining the appeal of the non-yielding yellow metal and reviving US Dollar (USD) demand.
The nomination of Scott Bessent as Treasury Secretary has contributed to easing market uncertainty, while reports of a possible Israel-Hezbollah ceasefire have further reduced geopolitical risk premiums. These factors collectively drive flows away from gold.
However, Trump's proposed 25% tariffs on imports from Mexico and Canada, along with a 10% tariff on Chinese goods, raise concerns about global economic disruption. Coupled with heightened tensions in Gaza and Lebanon, these geopolitical risks provide a floor for gold prices, limiting downside momentum.
Technical analysis: Key levels in focus
From a technical standpoint, gold is navigating critical levels:
Support:
The $2,600 mark, aligning with the 61.8% Fibonacci retracement of the recent recovery from a two-month low, serves as immediate support. A decisive break below this level would expose the 100-day Simple Moving Average (SMA), currently positioned near $2,565. Sustained selling pressure could drag gold toward the monthly swing low at $2,537-$2,536. A break below this zone would signal a continuation of the broader retracement from the $2,800 all-time high recorded in October.
Resistance:
On the upside, resistance is concentrated around $2,650, a confluence of the 100-period SMA on the 4-hour chart and the 38.2% Fibonacci retracement. A breakout above this area could trigger a short-covering rally, targeting $2,700 initially and extending toward the overnight swing high at $2,721-$2,722. Momentum indicators provide additional context. Oscillators on the daily chart remain neutral to slightly bearish, while intraday charts reflect muted upward potential unless the $2,650 barrier is breached decisively.
Fundamental outlook and trading implications
Traders are closely watching the release of the FOMC meeting minutes, which could clarify the Fed’s stance on the trajectory of interest rate cuts. Additionally, key US economic data, including the Q3 GDP revision and the Personal Consumption Expenditure (PCE) Price Index, are expected to influence USD dynamics and, by extension, gold prices.
Trading strategy:
Bearish scenario:
A sustained break below $2,600 would confirm the bearish outlook, with potential short opportunities targeting $2,565 and $2,537-$2,536. A breach of these levels would pave the way for deeper losses, extending the retracement toward $2,500.
Bullish scenario:
If gold reclaims $2,650, traders could look for long positions aiming at $2,700, with an extended target at $2,721-$2,722. Confirmation of momentum through volume and sustained strength above these levels would strengthen the case for a broader recovery.
Conclusion:
Gold prices remain vulnerable in the near term, with a bearish bias dominating as long as the $2,650 resistance holds. The $2,600 support remains pivotal, and its breach could accelerate downside momentum. The Fed’s guidance and evolving geopolitical dynamics will play a crucial role in shaping gold’s trajectory in the coming sessions.
Market dynamics suppressing gold
Gold’s appeal continues to wane as market participants price in the likelihood that President-elect Donald Trump’s fiscal expansion policies will reignite inflation, constraining the Fed’s ability to cut rates aggressively. The benchmark 10-year US Treasury yield has rebounded sharply, undermining the appeal of the non-yielding yellow metal and reviving US Dollar (USD) demand.
The nomination of Scott Bessent as Treasury Secretary has contributed to easing market uncertainty, while reports of a possible Israel-Hezbollah ceasefire have further reduced geopolitical risk premiums. These factors collectively drive flows away from gold.
However, Trump's proposed 25% tariffs on imports from Mexico and Canada, along with a 10% tariff on Chinese goods, raise concerns about global economic disruption. Coupled with heightened tensions in Gaza and Lebanon, these geopolitical risks provide a floor for gold prices, limiting downside momentum.
Technical analysis: Key levels in focus
From a technical standpoint, gold is navigating critical levels:
Support:
The $2,600 mark, aligning with the 61.8% Fibonacci retracement of the recent recovery from a two-month low, serves as immediate support. A decisive break below this level would expose the 100-day Simple Moving Average (SMA), currently positioned near $2,565. Sustained selling pressure could drag gold toward the monthly swing low at $2,537-$2,536. A break below this zone would signal a continuation of the broader retracement from the $2,800 all-time high recorded in October.
Resistance:
On the upside, resistance is concentrated around $2,650, a confluence of the 100-period SMA on the 4-hour chart and the 38.2% Fibonacci retracement. A breakout above this area could trigger a short-covering rally, targeting $2,700 initially and extending toward the overnight swing high at $2,721-$2,722. Momentum indicators provide additional context. Oscillators on the daily chart remain neutral to slightly bearish, while intraday charts reflect muted upward potential unless the $2,650 barrier is breached decisively.
Fundamental outlook and trading implications
Traders are closely watching the release of the FOMC meeting minutes, which could clarify the Fed’s stance on the trajectory of interest rate cuts. Additionally, key US economic data, including the Q3 GDP revision and the Personal Consumption Expenditure (PCE) Price Index, are expected to influence USD dynamics and, by extension, gold prices.
Trading strategy:
Bearish scenario:
A sustained break below $2,600 would confirm the bearish outlook, with potential short opportunities targeting $2,565 and $2,537-$2,536. A breach of these levels would pave the way for deeper losses, extending the retracement toward $2,500.
Bullish scenario:
If gold reclaims $2,650, traders could look for long positions aiming at $2,700, with an extended target at $2,721-$2,722. Confirmation of momentum through volume and sustained strength above these levels would strengthen the case for a broader recovery.
Conclusion:
Gold prices remain vulnerable in the near term, with a bearish bias dominating as long as the $2,650 resistance holds. The $2,600 support remains pivotal, and its breach could accelerate downside momentum. The Fed’s guidance and evolving geopolitical dynamics will play a crucial role in shaping gold’s trajectory in the coming sessions.