Gold prices (XAU/USD) advanced to fresh seven-week highs above the $4,325 level during early European trading on Monday, extending recent gains amid growing expectations that the US Federal Reserve (Fed) will cut interest rates next year. Prospects of lower borrowing costs tend to reduce the opportunity cost of holding non-yielding assets such as Gold, providing support for the precious metal. In addition, heightened uncertainty and a cautious market tone have boosted safe-haven flows, further underpinning prices.
However, the upside in Gold could face some resistance from last week’s relatively hawkish comments by several Fed officials, which may lend support to the US Dollar and weigh on USD-denominated commodities. Market participants will look for further guidance from speeches by Fed Governor Stephen Miran and New York Fed President John Williams later on Monday.
Attention will then shift to the US employment reports for October and November, due on Tuesday. Key releases, including Nonfarm Payrolls (NFP), Average Hourly Earnings, and the Unemployment Rate, are expected to offer fresh insight into labor market conditions and shape expectations for the Fed’s January policy meeting.
Daily digest market movers: Gold supported by rate outlook and geopolitical risks
Gold received an additional boost from heightened geopolitical tensions. Bloomberg reported on Sunday that a mass shooting at Bondi Beach in Sydney resulted in at least 16 fatalities and 40 injuries. Australian Prime Minister Anthony Albanese described the incident as a “targeted attack” against the Jewish community, previously calling it an act of antisemitic terrorism, adding to global risk aversion.
On the monetary policy front, Chicago Fed President Austan Goolsbee said on Friday that waiting for more data might have been a more prudent approach before further rate cuts, citing delays in key economic reports caused by a recent government shutdown. Cleveland Fed President Beth Hammack also emphasized the need to keep interest rates sufficiently restrictive to maintain downward pressure on inflation.
Last week, the Fed delivered its third and final 25-basis-point rate cut of the year, lowering the federal funds target range to 3.50%–3.75%. Fed Chair Jerome Powell noted that the move leaves policymakers “well positioned to wait and see how the economy evolves.” According to the CME FedWatch Tool, markets are now pricing in nearly a 76% probability that the Fed will keep rates unchanged at its January 2026 meeting, up from around 70% prior to the December decision.
Technical outlook: Gold retains a constructive longer-term bias
From a technical perspective, Gold remains in positive territory on the day and continues to exhibit a constructive longer-term outlook. On the four-hour chart, prices are holding above the key 100-day Exponential Moving Average (EMA), while the widening Bollinger Bands point to strengthening bullish momentum. The 14-day Relative Strength Index (RSI) stands near 68.75, well above the midline, reinforcing the bullish bias.
On the upside, immediate resistance is located in the $4,345–$4,355 area, which aligns with the upper Bollinger Band and the December 12 high. A sustained break above this zone could open the door for a retest of the record high near $4,381, followed by the $4,400 psychological level.
On the downside, initial support is seen at $4,257, the December 12 low. A deeper pullback could expose the next support at $4,200, coinciding with the 100-day EMA. Further weakness may bring the lower Bollinger Band near $4,166 into focus.
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