Gold News: Will Renewed China Central Bank Buying Fuel a Bullish Breakout?

Gold Prices Gain Over 1% as Central Bank Buying and Rate Cut Bets Drive Momentum

Gold prices climbed over 1% on Monday, bolstered by renewed purchases from China’s central bank and heightened expectations for a U.S. interest rate cut. These developments have pushed the metal closer to critical technical levels, reinforcing its appeal as a safe-haven asset.

At 11:42 GMT, XAU/USD is trading $2657.64, up $24.31 or +0.92%.

Key Resistance and Support Levels

Gold is nearing resistance at $2663.51, with the 50-day moving average at $2668.27 marking a significant threshold. A breakout above this level could pave the way for a test of $2693.40, a key Fibonacci target, with the November 25 peak of $2721.42 as a potential next milestone.

On the support side, gold has repeatedly held the $2629.13 to $2607.35 range over the past two weeks, establishing this zone as a solid base. Monday’s rally suggests traders view this area as a key foundation for further upward moves.

Central Bank Purchases and Rate Cut Expectations

China’s central bank resumed gold purchases in November after a six-month pause, adding to robust global demand. Analysts at UBS have highlighted central bank buying as a critical factor supporting gold prices this year. Renewed activity from the People’s Bank of China strengthens sentiment, particularly as geopolitical risks linger.

Meanwhile, traders are pricing in an 87% chance of a 25-basis-point Federal Reserve rate cut at next week’s meeting, up from 61.6% a week ago. Lower interest rates typically favor non-yielding assets like gold by reducing the opportunity cost of holding them.

Upcoming Data and Geopolitical Tensions

Investors are closely watching Wednesday’s U.S. Consumer Price Index (CPI) report and Thursday’s Producer Price Index (PPI) release. These inflation indicators will shape expectations for future Fed actions. Geopolitical uncertainties, including recent developments in the Middle East, are further supporting safe-haven demand for gold.

Market Forecast

Gold’s outlook remains bullish, supported by strong demand from central banks and expectations of monetary easing in the U.S. A sustained move above $2668.27 could trigger further gains, with $2693.40 as the next key target. However, rising U.S. Treasury yields could temper upside momentum, requiring traders to monitor bond markets and inflation data closely this week.

More Information in our Economic Calendar.