Gold Capped by Resistance

Gold prices continue to trade within the 2,604 – 2,718 range on Monday following a correction lower from the upper-level late last week. Focus remains on the US Dollar as traders prepare for the upcoming rate decision this week. The Fed is widely expected to cut rates by a further .25% in line with recent signalling. With a further cut this week priced in, traders will be focusing more on what the Fed’s guidance is on future rate adjustments and the prospect of a follow-up cut early next year.

Fed in Focus

If the Fed refrains from signalling that a further cut is likely near-term, USD should remain bid, keeping gold prices skewed lower. However, if the Fed keeps the door open to further easing, this should see USD unwinding through year-end, setting up the path for gold prices to advance in coming weeks.

Near-Term Uncertainty

Away from the Fed and movements in USD, gold prices are also being driven by global safe-haven flows. Heightened geopolitical uncertainty remains a key upside component for gold with the Russia-Ukraine war, ongoing violence from Israel, and the recent coup in Syria, continuing to develop. Given the various situation on watch, gold remains vulnerable to fresh upside on any incoming headlines this week.

Technical Views

Gold

For now, gold prices continue to be capped by the 2,718.88 level which has acted as an upside barrier since early November. While the market holds above the 2,604.56 level, the focus is on a resumption of the bull trend and a continuation higher with 2,789.40 the bull target to note. To the downside, 2,530,59 is the main support to watch.