Gold price clings to gains near two-week high, $2,700 remains in sight.

Gold price scales higher for the fifth straight day and touches a nearly two-week high on Friday.
The worsening Russia-Ukraine conflict continues to drive haven flows toward the XAU/USD.
Bets for a less dovish Fed, elevated US bond yields, bullish USD does little to hinder the move up.

Gold price (XAU/USD) sticks to strong intraday gains during the early European session and currently trades near a two-week top, just below the $2,700 mark. Persistent geopolitical risks stemming from the worsening Russia-Ukraine conflict assist the safe-haven precious metal to prolong its weekly uptrend for the fifth successive day. Apart from this, expectations that US President-elect Donald Trump’s expansionary policies could reignite inflationary pressures turn out to be another factor benefiting the commodity, which is considered a hedge against inflation.

Meanwhile, the US Dollar (USD) buying remains unabated in the wake of growing acceptance that higher inflation could limit the scope for the Federal Reserve (Fed) to cut interest rates further. Furthermore, expectations for a less dovish Fed, along with concerns about a bigger fiscal deficit, remain supportive of elevated US Treasury bond yields, albeit do little to dent the bullish sentiment surrounding the non-yielding Gold price. The XAU/USD bulls even shrug off the prevalent risk-on mood, suggesting that the path of least resistance for the bullion is to the upside.

Gold price bulls retain near-term control as geopolitical risks persist

Mounting Russia-Ukraine tensions continue to drive haven flows and assist the Gold price to scale higher for the fifth straight day on Friday, despite a bullish US Dollar.
Russian forces fired a new intermediate-range ballistic missile at Ukraine in response to the latter’s use of US and UK-made missiles in attacks on targets in Russia.
The USD Index, which tracks the Greenback against a basket of currencies, advanced to its highest level since October 2023 amid bets for a less dovish Federal Reserve.
Investors remain concerned that US President-elect Donald Trump’s policies could reignite inflation and force the Fed to take a slower course in its rate-cut path.
A slew of influential FOMC members, including Fed Chair Jerome Powell, recently warned about inflationary shocks and cautioned on further policy easing.
According to the CME Group’s FedWatch Tool, traders are pricing around a 55% chance that the Fed will lower borrowing costs by 25 basis points in December.
Meanwhile, Chicago Fed President Austan Goolsbee said that the inflation is on its way down to 2% and that it may make sense to slow the pace of interest rate cuts.
Adding to this, New York Fed President John Williams noted that the labor market is in balance and not providing any upward pressure on inflation.
On the economic data front, US Weekly initial jobless claims dropped by 6K last week, to 213K, or a seven-month low against expectations for a reading of 220 K.
US Existing Home Sales rebounded sharply after September’s slump to the lowest since October 2010 and posted the first annual gain since mid-2021 in October.
The Philly Fed Manufacturing Index indicated that manufacturing activity in the Philadelphia region unexpectedly contracted in November and fell to -5.5 from +10.3.
Friday’s release of flash PMIs will be looked for a fresh insight into the health of the global economy, which, in turn, should provide a fresh impetus to the XAU/USD.

Gold price could accelerate the move up once $2,700 is cleared decisively

The overnight breakout above the $2,665 confluence – comprising the 50% retracement level of the recent pullback from the all-time peak and the 100-period Simple Moving Average (SMA) on the 4-hour chart – was seen as a key trigger for bulls. Adding to this, technical indicators on the daily chart have again started gaining positive traction and support prospects for a further appreciating move for the Gold price. Hence, some follow-through strength beyond the $2,700 mark, towards the $2,710-2,711 supply zone, looks like a distinct possibility. Acceptance above the said barriers will reaffirm the positive bias and lift the XAU/USD towards the next relevant hurdle near the $2,736-2,737 region.

On the flip side, the $2,665 confluence hurdle breakpoint might now protect the immediate downside ahead of the $2,635-2,634 area, or the 38.2% Fibonacci retracement level. This is followed by the $2,622-2,620 intermediate support and the $2,600 round figure. A convincing break below the latter could make the Gold price vulnerable to accelerate the fall towards the 100-day SMA, around the $2,560 region, en route to last week’s swing low, around the $2,537-2,536 area. Failure to defend the said support levels will shift the bias back in favor of bearish traders and set the stage for deeper losses.