Gold clings to gain around $2,670/two-week top, short-term bullish bias remains

• Gold price climbs back closer to a two-week high and draws support from a combination of factors. 
• Geopolitical risks continue to benefit the safe-haven XAU/USD amid December Fed rate cut bets.
• The technical setup now seems tilted in favor of bulls and supports prospects for additional gains.

Gold price (XAU/USD) retains its positive bias through the Asian session on Tuesday, though it lacks follow-through buying and remains below a two-week high touched the previous day. Investors seem convinced that US President-elect Donald Trump’s policies will boost inflation and force the Federal Reserve (Fed) to pause its rate-cutting cycle. This, in turn, acts as a tailwind for the US Dollar (USD) and turns out to be a key factor capping gains for the non-yielding yellow metal.

That said, geopolitical tensions might continue to bolster safe-haven demand, which, along with the resumption of buying by China’s central bank for the first time in seven months, should offer support to the Gold price. Adding to this, concerns that Trump’s tariff plans could trigger a second wave of global trade wars support prospects for further near-term gains for the XAU/USD. Traders, however, might opt to wait for the release of the US consumer inflation figures on Wednesday.

Gold price bulls have the upper hand amid safe-haven demand, December Fed rate cut bets and central bank buying

• Geopolitical tensions in the Middle East increased over the weekend after Syrian rebels took control, forcing President Bashar al-Assad to flee to Russia and driving haven flows towards the Gold price. 
• The People’s Bank of China announced on Saturday said it bought 160,000 fine troy ounces of Gold in November, ending a six-month pause in purchases and lending additional support to the bullion. 
• US President-elect Donald Trump has pledged to impose big tariffs against America’s three biggest trading partners – Mexico, Canada and China – and also threatened a 100% tariff on ‘BRICS’ nations. 
• The CME Group’s FedWatch Tool indicates that traders are currently pricing in over an 85% chance that the Federal Reserve will lower borrowing costs by 25 basis points at its December policy meeting. 
• The recent hawkish remarks by several Fed officials, along with expectations that Trump’s policies would reignite inflation, suggest that the US central bank could pause its rate-cutting cycle. 
• This led to the overnight bounce in the US Treasury bond yields, from the lowest daily close since October 18 posted on Friday, and offers some support to the US Dollar, which might cap the XAU/USD. 
• This week’s main event will be Wednesday’s release of the US Consumer Price Index for November, which might guide Fed policymakers on their decision and influence the non-yielding yellow metal. 

Gold price seems poised to appreciate further; Monday’s breakout above the $2,650 supply zone in play

From a technical perspective, the overnight breakout through and daily close above the $2,650 barrier could be seen as a fresh trigger for bullish traders. Moreover, oscillators on the daily chart have just started gaining positive traction and support prospects for a further appreciating move for the Gold price. Hence, some follow-through strength towards reclaiming the $2,700 mark, en route to the $2,720-2,722 supply zone, looks like a distinct possibility.

On the flip side, the $2,650 resistance breakpoint, which coincides with the 200-period Exponential Moving Average (EMA) on the 4-hour chart, should now act as an immediate strong support. A convincing break below might expose the next relevant support near the $2,625-2,620 area before the Gold price eventually drops to the $2,600 mark. A subsequent break below the 100-day SMA, currently around the $2,590-2,585 region, will set the stage for deeper losses and drag the XAU/USD to the November swing low, around the $2,537-2,536 zone.