The gold price (XAU/USD) remains under pressure, trading above the $2,650 level during Monday’s European session. While the precious metal has managed to hold above key technical support—the 100-period SMA on the 4-hour chart—several macroeconomic and geopolitical factors are contributing to its bearish tone.
Key Drivers Impacting Gold Prices
- Improved Market Sentiment:
- The nomination of Scott Bessent as the US Treasury Secretary alleviates uncertainty in markets, boosting investor confidence.
- Reports of a potential ceasefire deal between Israel and Hezbollah reduce demand for safe-haven assets.
- US Dollar Strength:
- Optimism surrounding President-elect Donald Trump’s business-friendly policies supports a rally in equities and strengthens the USD.
- Expectations of controlled inflation and potential hawkish Federal Reserve policies further limit demand for gold.
- Treasury Yields:
- A decline in US Treasury bond yields due to Bessent’s expected conservative fiscal policies offers limited support to gold.
- Positive US Economic Data:
- The S&P Global Composite PMI rose to 55.3 in November, the highest since April 2022, signaling robust economic growth.
- The CME Group’s FedWatch Tool indicates a 55% probability of a December rate cut, suggesting a cautious monetary policy stance.
Technical Analysis
- Support Levels:
- $2,650: Critical support near the 100-period SMA and 38.2% Fibonacci retracement level. A break below could target:
- $2,630-2,629 (50% Fibonacci retracement).
- $2,610-2,608 (61.8% Fibonacci retracement).
- $2,650: Critical support near the 100-period SMA and 38.2% Fibonacci retracement level. A break below could target:
- Resistance Levels:
- $2,677-2,678: Immediate resistance near the 23.6% Fibonacci retracement level.
- $2,700: Psychological resistance, followed by:
- $2,721-2,722: Asian session high.
- $2,748-2,750: Key supply zone.
- $2,790: All-time high from late October.
- Indicators:
- Oscillators on the 4-hour chart remain positive, signaling potential for consolidation. However, a break below the 100-period SMA would likely confirm bearish momentum.
Outlook
- Bearish Scenario: If the gold price breaks below the $2,650 level, it could accelerate towards $2,630 and beyond.
- Bullish Scenario: Sustained trading above $2,677-2,678 and a move past $2,700 could trigger a rally toward $2,750 and potentially test the $2,790 all-time high.
Investors should monitor upcoming key events, including the FOMC minutes, PCE inflation data, and any updates on the Middle East ceasefire, for clearer market direction.
