• The gold price is at its highest level in over two weeks, which is due to a number of factors.
• Geopolitical risks, trade war fears and interest rate cuts by major central banks underlie the XAU/USD pair.
• Rising US bond yields underpin the US dollar and limit the yellow metal ahead of the US CPI report.

The gold price (XAU/USD) extended its weekly upward trend for the third day in a row on Wednesday and reached a two-and-a-half-week high during the Asian session. This stock is currently expected to top $2,700 and its price remains well supported by a combination of factors. Geopolitical risks arising from the escalating Russia-Ukraine war and tensions in the Middle East, as well as concerns about US President-elect Donald Trump’s tariff plans, continue to drive safe-haven demand. Moreover, expected interest rate cuts by major central banks provide additional support for the unprofitable yellow metal.

That said, the recent rally in the U.S. dollar (USD) to a near-weekly high reached on Tuesday is keeping USD-denominated gold from continuing to rise. Moreover, bulls are deciding to relax their assumptions ahead of today’s release of U.S. consumer inflation data, which could assist Fed policymakers make decisions next week. This, in turn, will influence the USD and provide a recent impetus for the precious metal. Meanwhile, the fundamental backdrop suggests that the path of least resistance for XAU/USD is up.

Gold price continues to find support from haven inflows and bets on further interest rate cuts by major central banks

• Israel has carried out airstrikes against military targets across Syria and deployed ground troops outside the demilitarized buffer zone for the first time in 50 years after the fall of President Bashar al-Assad’s regime.
• Ukrainian President Volodymyr Zelensky issued an order to augment funds to equip brigades with recent drones and raised the idea of ​​deploying foreign troops in Ukraine until it joins the NATO military alliance.
• US President-elect Donald Trump announced gigantic tariffs on America’s three largest trading partners – Mexico, Canada and China – and also threatened to impose 100% tariffs on the so-called “BRICS” countries.
• The Bank of Canada is expected to cut interest rates later today, with the European Central Bank and Swiss National Bank likely to follow suit on Thursday, which should continue to support the volatile gold price.
• According to CME Group’s FedWatch tool, markets are currently pricing in a greater than 85% probability that the Federal Reserve will cut borrowing costs by 25 basis points at its December monetary policy meeting.
• However, recent hawkish comments from several influential FOMC members, including Fed Chair Jerome Powell, suggest the U.S. central bank may be taking a more cautious stance on interest rate cuts.
• Expectations for a less dovish Fed helped U.S. Treasury yields stay higher for a second day on Tuesday and lifted the U.S. dollar to a four-day high, although it did little to dampen bullish sentiment around the precious metal.
• Market attention remains focused on the key US Consumer Price Index (CPI) report, which could provide clues on the US interest rate outlook and provide fresh momentum for the underperforming XAU/USD currency pair.
• The US headline CPI is expected to augment by 0.3% in November and by 2.7% on an annual basis. Meanwhile, it is forecast that the main indicator (excluding food and energy prices) will remain unchanged at 3.3% y/y.

The gold price may accelerate positive momentum once the robust $2,720-$2,722 barrier is decisively breached

From a technical point of view, this week’s break through the supply zone at USD 2,650-2,655 and the subsequent upward move favors bullish investors. Moreover, the oscillators on the daily chart are gaining strength and are still far from the overbought area. This, in turn, confirms the near-term positive outlook for the gold price and supports the prospects of dip-buying occurring near the mentioned resistance breakout point. This should assist limit the decline for the XAU/USD pair near the $2,630 area, below which the downward trajectory could extend further towards the round $2,600 level.

On the other hand, a sustained move beyond the round $2,700 could push further towards the $2,720-2,722 threshold. Resistance then appears near the $2,735 area, which, if cleared, would suggest that the recent corrective decline from the all-time high reached in October has ended and has changed sentiment in favor of bullish investors. This momentum could then push the gold price up to the $2,758-$2,760 barrier on its way to the $2,770-$2,772 region and $2,790 area, which is an all-time high.