Gold prices (XAU/USD) extended their rally to a new all-time high near the $4,300 area during early European trading on Monday, supported by growing expectations of interest rate cuts by the US Federal Reserve. Signs of easing inflationary pressures and softer US labor market data have reinforced market bets that the Fed could move toward a more accommodative stance, boosting demand for the non-yielding precious metal.
Lower interest rates typically reduce the opportunity cost of holding Gold, making it more attractive to investors. At the same time, persistent geopolitical risks continue to underpin safe-haven flows. Escalating tensions between Israel and Iran, alongside rising friction between the United States and Venezuela, have strengthened demand for assets perceived as stores of value during periods of uncertainty, further supporting Gold prices.
Despite the strong upside momentum, financial markets may remain relatively cautious as traders potentially lock in profits ahead of the upcoming long holiday period. This could limit further gains in the short term. Later on Monday, market participants will focus on the release of the US Chicago Fed National Activity Index for September. Attention will then shift to Tuesday’s preliminary US Gross Domestic Product (GDP) data for the third quarter.
Daily digest market movers: Gold supported by Fed outlook and geopolitical risks
- US officials told Reuters on Sunday that Washington is still pursuing a third oil tanker near Venezuela, as President Donald Trump steps up pressure through an expanded oil blockade targeting Nicolás Maduro’s government.
- According to Reuters, Israeli Prime Minister Benjamin Netanyahu stated over the weekend that officials are preparing to brief President Trump on potential options for renewed military action against Iran.
- The final University of Michigan Consumer Sentiment Index for December was revised lower to 52.9 from the preliminary reading of 53.3, defying expectations for an upward revision to 53.4.
- Cleveland Fed President Beth Hammack said on Sunday that monetary policy is currently well-positioned for a pause, adding that she plans to evaluate the economic impact of the cumulative 75 basis points (bps) in rate cuts during the first quarter, according to Bloomberg.
- Markets are currently pricing in just a 21.0% probability of another Fed rate cut at the January meeting, following three consecutive quarter-point reductions, based on the CME FedWatch tool.
Gold remains bullish, eyes another record high
Gold continues to trade firmly in positive territory. From a technical perspective, the four-hour chart shows that the bullish trend remains intact, with prices holding comfortably above the key 100-period Exponential Moving Average (EMA). The widening Bollinger Bands signal increasing volatility, while the 14-day Relative Strength Index (RSI) remains above its midline, indicating sustained bullish momentum.
Immediate resistance is located at the record high of $4,381. A decisive break above this level could pave the way for a move toward the $4,400 psychological threshold.
On the downside, a sustained move below the December 20 low at $4,337 may trigger renewed selling pressure, potentially dragging prices toward the lower Bollinger Band near $4,307, followed by the 100-day EMA around $4,253.
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