Gold sticks to modest gains amid geopolitical risks, remains below $2,600 mark

• Gold price gains some positive traction on Monday and snaps a six-day losing streak. 
• Geopolitical risks benefit the safe-haven XAU/USD amid a subdued USD demand.
• Bets for less aggressive Fed rate cuts and elevated US bond yields cap further gains. 

Gold price (XAU/USD) attracts some haven flows at the start of a new week amid the risk of a further escalation of geopolitical tensions and moves away from a two-month low touched last Thursday. The intraday move up is further supported by subdued US Dollar (USD) price action, which tends to underpin demand for the USD-denominated commodity. The precious metal, however, remains below the $2,600 mark through the Asian session on the back of expectations for a less aggressive policy easing by the Federal Reserve (Fed). 

Investors remain hopeful that US President-elect Donald Trump’s expansionary policies will boost inflation and limit the scope for further interest rate cuts by the Fed. This has been a key factor behind the recent upsurge in the US Treasury bond yields and favors the USD bulls, warranting some caution before positioning for a further appreciation for the non-yielding Gold price. Hence, a strong follow-through buying is needed to confirm that the XAU/USD has formed a near-term bottom and that the corrective fall from the all-time peak has run its course. 

Gold price struggles to build on intraday move up amid reduced bets for more Fed rate cuts

• Gold price registered its biggest weekly decline since September 2023 and dropped to over a two-month low last week amid the recent strong US Dollar rally to over a one-year high. 
• Geopolitical developments over the weekend drove some haven flows and assisted the precious metal to gain strong positive traction during the Asian session at the start of a new week. 
• US President Joe Biden authorized Ukraine to use US-supplied long-range missiles to strike deeper inside Russia, which has deployed North Korean troops to reinforce its war.
• A Russian attack on a nine-story building killed at least eight people in the northern city of Sumy. Russia also launched a massive drone and missile attack targeting energy infrastructure. 
• Israeli forces killed at least 111 Palestinians in the Gaza Strip on Saturday and continued military operations in Lebanon after assassinating Hezbollah’s top media relations officer, Mohammad Afif.
• Investors now seem convinced that President-elect Donald Trump’s tariff plans and debt-funded tax cuts would stoke inflation, potentially slowing the Federal Reserve’s rate easing cycle. 
• Fed Chair Jerome Powell said last Thursday that there’s no need to hurry into cutting interest rates amid a resilient economy, a strong job market, and inflation still above the 2% target.
• Boston Fed President Susan Collins said in an interview that another rate cut in December is on the table, but it is not a “done deal” and that there’s no preset path for monetary policy.
• Separately, Chicago Fed President Austan Goolsbee noted that as long as we keep making progress toward the 2% inflation goal, rates will be a lot lower than where they are now.
• The yield on the benchmark 10-year US government bond stands firm near a multi-month peak, which favors the USD bulls and might cap gains for the non-yielding yellow metal.

Gold price needs to find acceptance above the $2,600 mark for bulls to retain intraday control

From a technical perspective, the recent sharp pullback from the all-time peak stalled near the 50% retracement level of the June-October rally. The said support, around the $2,536-2,535 area, coincided with the 100-day Simple Moving Average and should now act as a key pivotal point. A convincing break below will be seen as a fresh trigger for bearish traders and pave the way for further losses. The subsequent downfall could drag the Gold price further towards the $2,500 psychological mark en route to the 61.8% Fibo. level, around the $2,480 region.

On the flip side, any subsequent strength above the $2,600 mark (38% Fibo. level) is likely to confront stiff resistance and remain capped near the $2,620-2,622 region. Some follow-through buying, however, could trigger a short-covering rally towards the $2,655-2,657 congestion zone, or the 50-day SMA, en route to the $2,672-2,673 region (23.6% Fibo. level). A sustained move beyond the latter might shift the bias in favor of bulls and allow the Gold price to reclaim the $2,700 round figure.