Gold prices (XAU/USD) faced downward pressure on Monday, pulling back from their recent multi-week highs. The yellow metal was trading around $2,635, marking a decline for the second consecutive day. The U.S. Dollar (USD) remained near a two-year high, buoyed by the Federal Reserve’s (Fed) hawkish stance, which indicated fewer interest rate cuts in 2025. Additionally, optimism surrounding U.S. President-elect Donald Trump’s expansionary policies continued to support the Greenback, further weighing on gold, a non-yielding asset.
Geopolitical Tensions Provide Some Support for Gold
Despite the downward trend, persistent geopolitical risks—including the ongoing Russia-Ukraine war and Middle East tensions—continue to provide some support for gold as a safe-haven asset. Furthermore, concerns over Trump’s proposed tariffs add to global uncertainty, which should limit any significant losses for the precious metal. As a result, traders are cautious, awaiting stronger signals before positioning for further declines after the retracement from last week’s high of $2,665.
Looking Ahead: U.S. Economic Data in Focus
Traders are now looking to the release of key U.S. economic data later in the North American session, including the final U.S. Services PMI and Factory Orders report, for potential market-moving catalysts.
Technical Outlook: Support Levels and Resistance Zones
From a technical standpoint, gold’s price is likely to find support around the 100-day Simple Moving Average (SMA), which is currently positioned near $2,625. A further dip below this level could push prices to the $2,600 mark, with the potential to test the December monthly swing low near $2,583. A significant break below this level could trigger a deeper pullback, attracting more bearish momentum.
On the upside, any move above the Asian session high of around $2,647 could help gold reclaim the $2,665 level, which represents a multi-week peak. If momentum continues, gold could challenge intermediate resistance at the $2,681-$2,683 range, with the $2,700 level acting as a key pivot point. A decisive break above $2,700 could extend the two-week-old uptrend.
Conclusion
Gold prices are currently facing downward pressure due to the strength of the U.S. Dollar and the Federal Reserve’s hawkish signals. However, geopolitical tensions and inflation concerns continue to provide underlying support for the metal, preventing deeper losses. As the market awaits key economic data and further developments on the global stage, gold’s next move will likely depend on the balance between these forces. Technical levels suggest that the precious metal could either consolidate around support zones or stage a recovery if bullish momentum gains traction. The coming days will be crucial in determining whether gold can maintain its recent upward trend or if further retracements are in store.