Gold rebounds on Fed optimism

Gold recovers after sharp year-end drop

Gold rises on Fed rate cut optimism and safe-haven flows

Gold (XAU/USD) is trading higher in early European hours on Tuesday, climbing above the $4,350 level.

The precious metal is recovering part of the ground lost after a sharp 4.5% drop in the previous session — its largest daily decline since October.

The Chicago Mercantile Exchange (CME) raised margin requirements for gold and silver futures, prompting profit-taking and portfolio rebalancing ahead of the New Year holiday.

Rate cut outlook supports non-yielding assets

Despite recent selling pressure, expectations of rate cuts by the Federal Reserve in 2026 could lower the opportunity cost of holding gold and support its price.

In an environment of global economic uncertainty and geopolitical tensions, traditional assets like gold remain attractive.

Thin year-end liquidity; eyes on FOMC minutes

As the New Year holiday approaches, trading volumes have declined and markets are in wait-and-see mode.

Traders now await the release of the Federal Open Market Committee (FOMC) minutes on Tuesday — a document that could offer fresh clues about the future path of interest rates in the United States.

Geopolitical developments boost gold’s safe-haven appeal

Russia has accused Ukraine of launching a drone strike on the presidential residence in the north — a move that could shift Moscow’s stance in peace negotiations.

Ukraine has denied the allegations, calling them “false justifications for further attacks.”

In such an environment, assets like gold ، seen as safe havens ، may attract increased investor interest.

US economic data reinforces rate cut scenario

According to the National Association of Realtors, Pending Home Sales in the United States rose 3.3% in November — the highest level since February 2023.

This data, combined with comments from the President of the United States expressing support for low interest rates under the incoming Fed chair, has raised concerns about central bank independence.

The FedWatch tool estimates a 16.1% probability of a rate cut at the January meeting.

Technical analysis: Gold maintains bullish bias with potential consolidation

Gold remains above its 100-day EMA on the daily chart, and Bollinger Bands are expanding — a sign of bullish bias.

However, the 14-day RSI is hovering near the midline, indicating neutral momentum and the possibility of short-term consolidation.

Immediate resistance is seen at the upper Bollinger Band near $4,520.

A break above this level could open the path toward the historic high of $4,550, followed by the psychological barrier at $4,600.

On the downside, initial support lies between $4,305 and $4,300 — the low from December 29.

A break below this zone could expose the December 16 low at $4,271.

Conclusion: Gold rebounds as eyes turn to the Fed

Gold is on a recovery path after a sharp decline, supported by several fundamental factors:

Rate cut expectations

Geopolitical tensions

Strong US economic data

Political signals on monetary policy

Still, markets remain cautious, and the release of the FOMC minutes could set the tone for gold prices as we enter 2026.