Gold Price Nears $2,627 Resistance Amid Fed Rate Speculation; Bullish Breakout Looms

The market’s focus has now shifted to the Federal Reserve, as several officials are scheduled to speak this week. Their comments could provide critical insights into whether the Fed will proceed with further interest rate cuts.

Currently, traders assign a 58.9% probability to a 25-basis-point rate cut in December, while the odds of holding rates steady stand at 41.1%. A dovish stance could further strengthen gold’s bullish trajectory, given its appeal in low-interest-rate environments.

Geopolitical Tensions Add to Bullion’s Appeal

Geopolitical risks continue to underpin gold’s safe-haven status. Over the weekend, Russia launched its most extensive airstrike on Ukraine in three months, targeting critical infrastructure.

Such conflicts often bolster demand for non-yielding assets like gold, especially when combined with an easing monetary policy environment.

Despite the geopolitical backdrop, the U.S. labor market remains tight, though its contribution to inflationary pressures has lessened compared to prior years, according to San Francisco Fed economists.

This nuanced inflation dynamic further complicates the Fed’s decision-making, potentially adding to gold’s volatility in the coming weeks.

Gold Technical Outlook: Key Resistance at $2,627

From a technical perspective, Gold Spot (XAU/USD) is testing the $2,627 resistance zone, which aligns with the 50-period EMA at $2,605. The immediate outlook remains bullish, but RSI at 71.57 signals overbought conditions, suggesting that the current upward momentum may be losing steam.

• Resistance Levels: Immediate resistance is $2,627, followed by $2,649 and $2,674.

• Support Levels: The $2,605 pivot is critical, with further support at $2,581 and $2,557.

A decisive breakout above $2,627 could push gold toward $2,649 and beyond. Conversely, failure to hold above $2,605 might lead to a retracement toward key support levels.

Conclusion

Gold’s performance hinges on upcoming Fed commentary and geopolitical developments. A dovish signal from the Fed or escalations in geopolitical tensions could propel prices beyond $2,627.

However, traders should monitor overbought signals on the RSI and key technical levels for signs of potential consolidation or pullback.