Gold prices (XAU/USD) ease back from seven-week highs, trading below the $4,300 mark during the early European session on Tuesday. The pullback is driven by profit-taking and weak long liquidation among short-term futures traders. In addition, renewed optimism surrounding potential Ukraine peace talks is weighing on demand for traditional safe-haven assets, including Gold.
Despite the near-term softness, downside pressure on the yellow metal may remain contained. The Federal Reserve delivered its third interest rate cut of the year last week and signaled scope for further easing in 2026. A lower interest rate environment typically reduces the opportunity cost of holding non-yielding assets, providing structural support for Gold. However, improving geopolitical sentiment could limit upside momentum by dampening safe-haven flows.
Market attention is now firmly centered on a batch of delayed US macroeconomic releases, postponed due to the recent government shutdown and scheduled for publication later on Tuesday. The US Nonfarm Payrolls (NFP) report will be the key catalyst, offering fresh insight into labor market conditions and the future path of US interest rates. Signs of cooling in employment growth would strengthen expectations for additional Fed rate cuts, potentially underpinning Gold prices. Investors will also assess US Retail Sales data and the flash Purchasing Managers’ Index (PMI) readings.
Daily digest market movers: gold slips despite dovish Fed signals
US officials said on Monday that a framework for a potential agreement with Ukrainian President Volodymyr Zelenskyy to end the war with Russia is close, although territorial issues and security guarantees from the US and Europe remain unresolved.
New York Fed President John Williams stated that monetary policy is well-positioned heading into next year following last week’s rate cut, citing elevated risks to employment and easing inflation pressures, according to Bloomberg.
Fed Governor Stephen Miran reiterated that current monetary policy remains overly restrictive, adding that he is likely to stay at the central bank after his term expires until a successor is confirmed.
The Fed’s Summary of Economic Projections, or “dot plot,” shows the median forecast pointing to just one 25-basis-point rate cut by the end of 2026. By contrast, financial markets continue to price in at least two rate reductions over the same period.
Fed funds futures imply a 75.6% probability that the Fed will keep rates unchanged at its January meeting, unchanged from the previous session, according to the CME Group’s FedWatch tool.
Gold technical outlook: long-term uptrend remains intact
From a technical perspective, Gold edges modestly lower on the day, but the broader bullish structure remains intact. On the four-hour chart, prices continue to hold well above the 100-day Exponential Moving Average, indicating that the path of least resistance remains to the upside. Expanding Bollinger Bands and a 14-day Relative Strength Index hovering near 60 further point to strengthening underlying momentum.
On the upside, immediate resistance is located at the December 15 high near $4,350. A sustained break above this level could see XAU/USD target $4,365, the upper Bollinger Band, followed by the all-time high around $4,381.
On the downside, initial support is seen at the December 15 low near $4,285. A deeper correction could expose the December 12 low at $4,257, while a more pronounced sell-off may bring the 100-day EMA into focus near $4,210.
