Gold (XAU) Price Forecast: Is the $2663-$2693 Zone the End of the Gold Rally?

Will Gold’s Rally Sustain After Recent Lows?

Gold prices extended their recovery on Tuesday, climbing further after last week’s two-month low of $2536.85. Support at $2538.50 has held firm, fueling a rebound that gained momentum with Monday’s close above the prior bottom at $2604.39. Traders are now eyeing the $2663.51-$2693.40 retracement zone as the next key resistance level.

Despite the current rebound, the broader downtrend remains intact. Sellers are likely to re-enter near resistance, particularly with the 50-day moving average at $2656.59 adding technical pressure. A failure to break these levels could signal a renewed decline.

What’s Driving Gold Higher This Week?

A softer U.S. dollar and declining Treasury yields have been instrumental in supporting gold’s recovery. The dollar eased from its one-year highs as investors took profits after last week’s rally. A weaker dollar lowers the cost of gold for international buyers, boosting demand.

Spot gold surged 2% on Monday, marking its largest one-day gain in weeks. Saxo Bank’s head of commodity strategy, Ole Hansen, attributed the rally to the dollar’s pullback, which acted as the “necessary trigger” for hesitant buyers to return to the market.

Additionally, the prospect of a Federal Reserve rate cut in December is lending support. Fed fund futures show a 58.9% chance of a 25-basis-point rate cut, up from 41.1% last week, making gold more attractive as a non-yielding asset.

Could Geopolitical Tensions Add More Momentum?

Gold’s safe-haven appeal has also been bolstered by escalating geopolitical risks. Over the weekend, Russia launched its largest airstrike on Ukraine in three months, intensifying market concerns. Historically, gold has been a favored hedge during periods of geopolitical instability, particularly when combined with falling interest rates.

Will Gold Face Resistance at Key Levels?

While the recovery shows promise, gold faces strong resistance at $2663.51-$2693.40 and the 50-day moving average at $2656.59. These levels represent critical barriers, with the potential to attract sellers and cap gains in the near term.

However, if prices break through these levels, the rally could extend toward the $2700-$2750 range. The short-term outlook leans cautiously bullish, though traders should prepare for potential reversals if the dollar strengthens or yields rise again. Upcoming Federal Reserve commentary will be key in shaping the market’s next moves.

Gold traders should remain vigilant, with the metal’s fortunes tied closely to the interplay of dollar performance, interest rate expectations, and geopolitical developments.