Gold is approaching resistance at $2663.51, with the 50-day moving average of $2668.27 marking a significant threshold. A breakout above this level could pave the way for a test of $2693.40, a key Fibonacci target, with the Nov. 25 peak of $2721.42 a potential next milestone.
On the support side, gold has repeatedly held the range of $2629.13 to $2607.35 over the past two weeks, marking this zone as a solid base. Monday’s rally suggests traders view this area as a key base for further upside moves.
Central bank purchases and expectations for interest rate cuts
China’s central bank resumed gold purchases in November after a six-month hiatus, contributing to robust global demand. Analysts at UBS have highlighted central bank purchasing as a critical factor supporting gold prices this year. Renewed activity from the People’s Bank of China is strengthening sentiment, especially as geopolitical risks persist.
Meanwhile, traders estimate an 87% chance of a 25 basis point Federal Reserve rate cut next week, up from 61.6% a week ago. Lower interest rates tend to favor non-yielding assets like gold because they lower the opportunity cost of holding them.
Upcoming data and geopolitical tensions
Investors are closely watching Wednesday’s U.S. Consumer Price Index (CPI) report and Thursday’s Producer Price Index (PPI). These inflation indicators will set expectations for future Fed actions. Geopolitical uncertainties, including recent developments in the Middle East, further support demand for gold from safe havens.
Market forecast
The outlook for gold remains bullish, supported by strong demand from central banks and expectations of monetary easing in the US. A sustained move above $2668.27 could lead to further gains, with $2693.40 as the next major target. However, rising U.S. Treasury yields could dampen upside momentum, prompting traders to keep a close eye on bond markets and inflation data this week.