Gold (XAU) Price Forecast: Bullish Momentum Hinges on $2,693 Pivot

Gold Surges to Two-Week High Nearing Key Resistance

Gold prices climbed to $2,704.45 on Wednesday, marking a two-week high before encountering resistance as it neared the November 25 peak at $2,721.42. A breakout above Fibonacci resistance at $2,693.40 earlier in the session signaled bullish momentum. However, the metal’s retreat highlights the significance of $2,693.40 as a pivotal level, with potential pullbacks targeting the 50-day moving average at $2,669.66 or the 50% retracement level at $2,663.51.

At 12:02 GMT, XAU/USD is trading $2697.37, up $3.50 or +0.13%.

Inflation Data Could Dictate Gold’s Next Move

All eyes are on U.S. inflation data, with the Consumer Price Index (CPI) report set to shape market sentiment. Analysts predict a 0.3% monthly rise in core CPI and a 3.3% annual increase. A dovish print could reinforce expectations of a 25-basis-point Federal Reserve rate cut on December 18, currently priced in with 86% probability, according to CME Group’s FedWatch Tool. Traders will also scrutinize Chair Powell’s remarks next week for insights into the Fed’s 2025 policy stance, critical for gold’s performance.

Geopolitics and Central Bank Actions Drive Sentiment

Gold’s recent rally has been fueled by geopolitical developments, including Syria’s regime change and reports of renewed gold purchases by China. These factors have bolstered safe-haven demand. However, a resurgent U.S. dollar, trading near a two-week high of 106.36 on Wednesday, could pose headwinds if inflation surprises to the upside, delaying the Fed’s rate-cut timeline.

Goldman Sachs Flags Risks to $3,000 Target

While Goldman Sachs projects gold prices reaching $3,000 by the end of 2025, fewer-than-expected Fed rate cuts could dampen the metal’s upside. The bank estimates gold may rise only to $2,890 if the Fed adopts a more cautious approach to monetary easing, underscoring the importance of upcoming inflation data and Powell’s commentary.

Will Gold Break Out or Retreat from Resistance?

The $2,693.40 pivot remains the key for gold’s near-term trajectory. A sustained move above this level could pave the way for a test of $2,721.42 and potentially the all-time high of $2,790.17. Conversely, failure to hold above $2,693.40 may trigger profit-taking, pulling prices back toward support levels near $2,670. Traders should prepare for heightened volatility as markets digest inflation data and its implications for Fed policy.

More Information in our Economic Calendar.