Gold (XAU) Price Forecast: Will Bulls or Bears Dominate in the $2629-$2607 Zone?

Gold Prices Hold Steady Amid Geopolitical Optimism and Rate Speculation

Gold prices edged higher on Tuesday after recovering from earlier losses, with the market stabilizing following Monday’s sharp 3% decline. Traders are closely monitoring retracement zones and geopolitical developments, alongside upcoming U.S. economic data, which could influence the short-term price action.

At 11:26 GMT, XAU/USD is trading $2630.76, up $5.15 or +0.20%.

Technical Analysis Highlights Key Support Levels

Gold’s overall trend remains bearish after a key support level at $2604.39 was breached earlier this month. This move created a lower-bottom pattern within the $2790.17 to $2536.85 range, establishing a primary retracement zone at $2663.51 to $2693.40.

The current short-term range, $2536.85 to $2721.42, defines another retracement zone between $2629.13 and $2607.35.

After a rally to $2721.42 last week, gold prices fell below the primary retracement zone, finding support within the short-term range.

A sustained move above $2629.13 could spark a counter-trend rally targeting $2663.51, while a breakdown below $2607.35 could lead to further declines toward the major support area near $2546.86 to $2536.85.

Geopolitical Optimism Eases Safe-Haven Demand

Safe-haven demand for gold softened on Tuesday following reports of potential ceasefire talks between Israel and Hezbollah, which brought optimism to geopolitical tensions. The prospect of a resolution dampened bullion’s appeal, despite broader economic uncertainties.

Monday’s sell-off was further pressured by news that President-elect Donald Trump’s nominee for Treasury secretary, Scott Bessent, could signal a pro-business stance. Tariff threats against Canada, Mexico, and China by Trump have yet to bolster gold’s safe-haven allure significantly, as potential inflation risks create uncertainty over the Federal Reserve’s monetary policy.

Focus Shifts to U.S. Economic Data

Investors await U.S. consumer confidence data and the Federal Reserve’s November meeting minutes, both expected to provide clarity on the likelihood of a December interest rate cut. Current market sentiment, reflected in the CME Group’s FedWatch Tool, suggests a 59.6% probability of a 25-basis-point cut.

A rate reduction would reduce the opportunity cost of holding gold, potentially offering support to prices. Conversely, stronger-than-expected economic data could weigh further on the metal.

Market Forecast

Gold prices are likely to remain range-bound in the near term, with key support at $2607.35 and resistance at $2663.51. A break above resistance could indicate a short-term recovery, but sustained selling pressure below $2607.35 would signal a bearish outlook, targeting the $2546.86 to $2536.85 region. Geopolitical developments and U.S. economic indicators will be pivotal for determining gold’s next move.

For a look at all of today’s economic events, check out our economic calendar.