Gold prices (XAU/USD) found support near the $2,638 mark early on Tuesday during the European session, pausing its recent dip from a one-week high hit the previous day. Heightened geopolitical tensions and concerns about a broader conflict in the Middle East contributed to maintaining demand for the safe-haven asset.
Despite these supportive factors, significant upward movement in the price of gold remains limited. Ongoing US Dollar (USD) strength, fueled by expectations that the Federal Reserve will take a measured approach to policy easing, keeps a lid on gains. Additionally, China’s disappointing fiscal stimulus measures have dampened investor sentiment, limiting potential upward momentum for XAU/USD.
Market Overview – Gold Supported by Geopolitical Risks, But USD Strength Dominates
The US Dollar reached its highest point since August 8 on Monday, buoyed by growing sentiment that the Federal Reserve will adopt a cautious stance on policy easing. Expectations for a steady 25 basis points rate cut in November also provide additional support for the USD.
Minneapolis Federal Reserve President Neel Kashkari suggested that despite recent easing, the current monetary policy remains restrictive. He also indicated that future rate cuts should be gradual, especially given the strong job market. Fed Governor Christopher Waller echoed this cautious sentiment, suggesting that the US economy is still performing well and might not be slowing at the desired pace.
On the other hand, concerns about China’s lackluster fiscal stimulus, combined with signs of economic softness in the world’s largest consumer of bullion, led to some selling pressure on gold at the beginning of the week.
Adding to geopolitical risks, Israel responded forcefully to Hezbollah’s drone attack on Sunday, which resulted in casualties, further heightening fears of an escalating conflict in the Middle East. As tensions rise, gold, typically seen as a safe-haven asset, continues to find support.
Technical Outlook – Key Levels for Gold Prices
From a technical perspective, the recent high of around $2,666–$2,667 has become an immediate resistance level for gold prices. Should gold manage to break through this zone, it could pave the way for a move toward the all-time high of $2,685–$2,686, recorded in September. Beyond that, the psychological $2,700 mark could be the next target for the bulls.
On the downside, if gold falls below the $2,632–$2,630 support level, buyers might step in to prevent further declines. However, any failure to hold this level could trigger a selloff, pushing prices toward the $2,600 threshold. A deeper correction could send the market to the next support near $2,560, with an eventual target around $2,500.
Conclusion – Monitoring Upcoming Data for Short-Term Moves
Traders will now focus on upcoming US data releases, such as the Empire State Manufacturing Index, and speeches from Federal Reserve officials, which could provide fresh trading opportunities for gold. As geopolitical tensions persist and USD strength continues, gold’s near-term movements remain unpredictable.
For those looking for regular updates on the gold market, you can visit our Daily Gold Signal page for insights and trends. For daily updates on gold price movements, check out this Daily Gold Update.
