Gold Faces Pressure, Support Remains
Despite an early rally toward the $4,100 psychological level, Gold (XAU/USD) declined for the second consecutive day on Monday. Optimism surrounding a potential trade agreement between the United States and China has dampened safe-haven demand, exerting selling pressure on the yellow metal. However, expectations of further interest rate cuts by the Federal Reserve and ongoing geopolitical tensions continue to offer support.
During Monday’s European session, Gold retraced after briefly breaching the $4,100 mark. The bearish momentum remains soft, reflecting a mixed fundamental backdrop. Preliminary trade discussions between top economic officials from the United States and China at the ASEAN Summit have boosted investor appetite for riskier assets, reducing demand for Gold.
According to the CME Group’s FedWatch Tool, traders have nearly fully priced in a 25-basis-point rate cut in December. This has kept the US Dollar on the defensive, indirectly supporting Gold as a non-yielding asset amid global uncertainty.
On Sunday, Russia launched a wave of drone attacks on Kyiv. Ukraine’s Air Force reported intercepting 90 out of 101 drones. Additionally, Russian President Vladimir Putin announced the successful final test of a new nuclear-powered cruise missile. These developments may reinforce safe-haven demand for Gold.
From a technical perspective, Gold has settled below the 23.6% Fibonacci retracement level of the July–October rally. However, last week’s rebound from the $4,000 psychological zone and mixed daily oscillators suggest caution for bearish positioning.
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Given the conflicting fundamental and technical signals, traders may prefer to remain on the sidelines ahead of the two-day Federal Reserve meeting starting Tuesday. The outcome of this meeting will likely shape the next directional move for both Gold and the US Dollar.