Gold holds firm above $2,660 on safe-haven demand, softer US Dollar

• Gold price catches fresh bids on Friday amid trade war fears and geopolitical tensions.
• The USD hits a fresh two-week low and offers further support to the XAU/USD pair.
• Bets for slower rate cuts by the Fed might keep a lid on the non-yielding yellow metal. 

Gold price (XAU/USD) gains strong positive traction on Friday and touches a four-day top, around the $2,662-2,663 area during the Asian session. Geopolitical tensions, along with trade war fears, continue to drive haven flows towards the precious metal. Adding to this, bets that the Federal Reserve (Fed) will lower borrowing costs again in December and the recent decline in the US Treasury bond yields offer additional support to the non-yielding commodity.

Meanwhile, the prospects for more interest rate cuts by the Fed drag the US Dollar (USD) to a fresh two-week low, which turns out to be another factor underpinning demand for the Gold price. That said, expectations that US President-elect Donald Trump’s policies will boost inflation, along with signs that the progress in lowering US inflation stalled in October, could restrict the Fed from easing its policy further. This should limit the USD losses and cap the XAU/USD. 

Gold price sticks to intraday bullish bias amid trade war fears and geopolitical risks

• Russian President Vladimir Putin said Russia may use its new hypersonic missile to attack decision-making centres in Ukraine in response to the latter’s firing of Western missiles at its territory.
• US President-elect Donald Trump earlier this week pledged to impose tariffs on all products coming into the US from Canada, Mexico and China, which, in turn, could trigger trade wars. 
• The US Dollar struggles to capitalize on Thursday’s modest gains as traders now see a 70% chance that the Federal Reserve will cut interest rates at the next policy meeting in December.
• Minutes from the November FOMC meeting released earlier this week revealed that committee members were divided over how much farther they may need to cut interest rates.
• The PCE data showed on Wednesday that the progress in lowering inflation in the US stalled in October. Investors also seem convinced that Trump’s policies will boost inflation.
• This suggests that the Fed may proceed cautiously, fueling uncertainty over the outlook for interest rates in 2025 and limiting any further decline in the US Treasury bond yields. 
• The benchmark 10-year US Treasury yield touched a two-week low on Wednesday on hopes that Trump’s Treasury Secretary nominee, Scott Bessent, will want to control US deficits.
• There isn’t any relevant market-moving economic data due for release on Friday and US stock markets will close early in observance of the Thanksgiving holiday. 

Gold price bulls have the upper hand while above the $2,650 confluence hurdle breakpoint

From a technical perspective, an intraday breakout above the $2,649-2,650 confluence hurdle – comprising the 100-hour Simple Moving Average (SMA) and the 38.2% Fibonacci retracement level of the weekly decline – was seen as a key trigger for bulls. The subsequent move up, however, stalls near the $2,663-2,664 region, which coincides with the 50% retracement level and should act as a pivotal point. Some follow-through buying has the potential to lift the Gold price to the $2,677 region, or the 61.8% Fibo. level, en route to the $2,700 round figure.

On the flip side, the $2,650 confluence resistance breakpoint now seems to protect the immediate downside, below which the Gold price could slide back to the $2,633 area (23.6% Fibo. level) and the overnight swing low, around the $2,620 region. The next relevant support is pegged near the monthly trough, around the $2,605 region. Some follow-through selling below the $2,600 mark should pave the way for deeper losses towards the 100-day SMA, currently pegged near the $2,573 area, en route to the monthly low, around the $2,537-2,536 region.