Gold (XAU/USD) extended its rally on Tuesday, reaching its highest level in more than a week during the Asian session. The metal is drawing strength from growing expectations of a Federal Reserve (Fed) rate cut in December, following a series of dovish remarks from key FOMC officials. The shift in sentiment has capped the recent US Dollar (USD) surge to its strongest point since late May, providing a tailwind for the non-yielding precious metal.
Geopolitical tensions are further boosting safe-haven flows. Persistent uncertainty surrounding the Russia-Ukraine conflict and renewed instability in the Middle East continue to support demand for gold. However, gains remain somewhat tempered by a broadly constructive tone across global equity markets and investor caution ahead of this week’s key US economic data releases, including Tuesday’s Producer Price Index (PPI) and Retail Sales.
Market movers: Gold supported by rising Fed rate-cut bets
New York Fed President John Williams said on Friday that interest rates could be lowered in the near term without jeopardizing the central bank’s progress on inflation. Fed Governor Christopher Waller added Monday that ongoing labor-market weakness is sufficient to justify another quarter-point rate cut in December.
According to the CME FedWatch Tool, markets now assign roughly an 80% probability to a 25-basis-point reduction in December to a target range of 3.50%–3.75%. This has limited upside for the US Dollar and continued to underpin gold.
Geopolitical tensions also remain elevated. Russia launched a fresh wave of attacks on Kyiv early Tuesday, striking residential areas and energy infrastructure. The escalation comes just days after US and Ukrainian officials met in Switzerland to discuss a US-brokered peace proposal aimed at ending the nearly four-year conflict.
The White House said President Donald Trump remains “hopeful” about the possibility of a deal but acknowledged that progress is far from assured. Ukrainian officials noted that the latest 19-point US plan omits a strict cap on the size of Ukraine’s armed forces — a change that may prove less acceptable to Moscow.
Meanwhile, the Gaza Government Media Office reported that Israel has violated the US-brokered Gaza ceasefire 497 times over the past 44 days, further amplifying geopolitical risk and supporting safe-haven demand for gold.
Investors now turn their focus to Tuesday’s US data docket, which includes delayed releases of PPI, Retail Sales, Pending Home Sales, and the Richmond Manufacturing Index — all potential catalysts for USD volatility and short-term moves in XAU/USD.
Technical outlook: Gold positions for a move toward $4,200
Gold’s sharp rebound on Monday held above the $4,022 confluence support — formed by an ascending trendline from late October and the 200-period Exponential Moving Average (EMA) on the 4-hour chart. Bullish momentum and positive readings on both 4-hour and daily oscillators suggest additional upside may be ahead.
A continuation higher could push XAU/USD toward the $4,177–$4,178 resistance zone, with the $4,200 psychological level coming into view shortly thereafter. A break above this region would open the path toward the monthly swing high near $4,245.
On the downside, initial support is seen at $4,132–$4,130. A sustained drop below this area may invite fresh buying interest near $4,110–$4,100. A decisive break under $4,030–$4,032 would shift near-term bias toward the bears and expose the $4,000 level. Below that, extended selling could target last week’s low at $3,968–$3,967, followed by support at $3,931, $3,900, and the late-October trough near $3,886.
