Gold prices (XAU/USD) extended their upward trajectory for the second consecutive day, rebounding from a one-week low near $2,600 during the European session on Wednesday. The rally, bolstered by heightened geopolitical risks and falling US Treasury yields, pushed the metal closer to $2,650, a two-day high. However, expectations of a slowdown in Federal Reserve interest rate cuts and a generally positive risk sentiment may limit further gains.
Market Drivers: Geopolitical Risks and Haven Demand
The ongoing global flight to safety has been fueled by a series of geopolitical developments:
Trade War Fears: President-elect Donald Trump’s plans for tariffs on imports from Canada, Mexico, and China have driven haven demand for gold.
Ukraine Conflict Escalation: Ukraine faced its largest Russian drone attack this week, and reports suggest Russia has deployed hypersonic missiles and North Korean troops. Meanwhile, Ukraine continues deep strikes inside Russia with Western-supplied missiles, heightening tensions.
Middle East Ceasefire: In contrast, a ceasefire between Lebanon and Israel, brokered by President Joe Biden, brought some relief to the region’s long-running conflict.
Economic Indicators:
US Consumer Confidence: The US Consumer Confidence Index rose to 111.7 in November, the highest since July 2023, reflecting optimism about economic resilience.
Federal Reserve Outlook: Minutes from the Federal Open Market Committee’s (FOMC) November meeting revealed uncertainty among officials about future rate cuts. The CME Group’s FedWatch Tool shows a 63% chance of a 25-basis-point rate cut in December.
Treasury Yields and Dollar Movement: The yield on the benchmark 10-year US Treasury bond remains above its recent lows, while the US Dollar consolidates near its weekly trough.
Key Data Ahead:
Market participants await the release of the revised US Q3 GDP figures and the Personal Consumption Expenditure (PCE) Price Index during the North American session for further directional cues.
Technical Outlook: Resistance and Support Levels
From a technical perspective, gold’s rebound from the 61.8% Fibonacci retracement level and subsequent strength signal bullish potential. However, momentum indicators suggest resistance near the 100-period Simple Moving Average (SMA) around $2,645. A sustained move above this level could drive prices toward $2,665 and eventually $2,700.
On the downside, immediate support lies in the $2,624–$2,622 zone, with a break below $2,600 likely to expose the 100-day SMA near $2,568 and a potential decline to the monthly low at $2,536. Failure to defend these levels could accelerate the corrective drop from October’s all-time high of $2,800.
In summary, while gold’s recent gains highlight a strong safe-haven appeal amid global uncertainties, further price action will hinge on geopolitical developments and key US economic data.
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