Gold price (XAU/USD) trades modestly higher above the $4,350 level during early European hours on Tuesday, recovering part of the sharp losses seen in the previous session. The precious metal fell roughly 4.5% on Monday, marking its steepest single-day decline since October, as aggressive profit-taking followed higher margin requirements imposed by the Chicago Mercantile Exchange (CME) Group on gold and silver futures.
The CME decision, which requires traders to post more collateral, triggered widespread portfolio rebalancing across metals markets. Despite this setback, downside pressure on gold appears limited, supported by growing expectations that the Federal Reserve could begin cutting interest rates in 2026. Lower rates would reduce the opportunity cost of holding non-yielding assets, underpinning demand for gold.
In addition, persistent geopolitical risks and global economic uncertainty continue to reinforce gold’s role as a traditional safe haven. Trading volumes, however, are likely to remain subdued ahead of the New Year holidays, with market participants awaiting the release of the Federal Open Market Committee (FOMC) Minutes later on Tuesday for fresh directional cues.
Daily digest market movers: Fed rate cut bets and geopolitical risks support gold
Geopolitical tensions resurfaced after Russia accused Ukraine of launching a drone attack on the Russian presidential residence in northern Russia, according to Reuters. Moscow said the incident could prompt a reassessment of its position in peace negotiations, while Ukraine rejected the allegations, with its foreign minister accusing Russia of seeking false pretexts for further military action.
On the policy front, the CME confirmed higher margin requirements for gold, silver, and other metals, a move aimed at managing risk amid elevated price volatility. In the US, macro data provided a mixed backdrop. Pending Home Sales rose 3.3% month-on-month in November, following an upwardly revised 2.4% gain in October, marking the strongest reading since February 2023 and beating market expectations.
Political pressure on the Federal Reserve has also drawn investor attention. US President Donald Trump said last week that he expects the next Fed chair to keep interest rates low and not “disagree” with him, comments that have reignited concerns over the central bank’s independence. Meanwhile, market pricing via the CME FedWatch tool shows a roughly 16.1% probability of a Fed rate cut at the January meeting.
Gold maintains bullish bias, RSI points to near-term consolidation
From a technical perspective, gold trades with a constructive tone as prices remain above the key 100-day Exponential Moving Average (EMA) on the daily chart. The widening Bollinger Bands indicate elevated volatility, supporting the broader bullish structure.
That said, near-term consolidation or a brief corrective pullback cannot be ruled out. The 14-day Relative Strength Index (RSI) is hovering near the midline, signaling neutral momentum in the short term.
Immediate resistance is located at the upper Bollinger Band near $4,520. A clear break above this level could open the door for a retest of the record high around $4,550, with scope for an extension toward the $4,600 psychological barrier. On the downside, initial support is seen in the $4,305–$4,300 zone, aligning with the December 29 low and a round-number level. A sustained move below this area could deepen the correction toward the December 16 low near $4,271.
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