Gold Price Forecast: XAU/USD bulls seem unstoppable amid supportive fundamental backdrop

Gold (XAU/USD) is seen building on the previous day's strong rally of over 2% and continues scaling new all-time highs for the second consecutive day on Tuesday. The commodity climbs closer to the $4,500 psychological mark during the Asian session and remains well supported by a combination of factors. Comments from US Treasury Secretary Scott Bessent add to the uncertainty around the Federal Reserve's (Fed) long-term policy credibility. This, along with dovish Fed expectations, exerts some follow-through pressure on the US Dollar (USD) and underpins the bullion. Adding to this, persistent geopolitical uncertainties benefit the precious metal's safe-haven status and contribute to the strong move up.

Speaking on a podcast, Bessent opened the door to a rethink of the Fed’s inflation framework and said that he favours the idea of an inflation range rather than a fixed-point target. Bessent further suggested the new Fed chair could consider scrapping the dot plot — a move that would mark a significant shift in how the central bank communicates its policy outlook. This comes on top of expectations that the new Fed chair will slash interest rates regardless of the economic fundamentals. In fact, traders are still pricing in a greater chance of two more rate cuts by the US central bank, which drags the USD lower for the second straight day and further drives flows towards the non-yielding yellow metal.

US President Donald Trump had ordered a blockade of sanctioned oil tankers entering or leaving Venezuela to tighten the economic screws on President Nicolás Maduro. The US seized a large tanker on December 10 and intercepted a second vessel over the weekend, and was also pursuing a third tanker. This raises the risk of a further escalation of tensions in the region. Apart from this, US Vice President JD Vance said that he doesn’t have confidence that there will be a peaceful solution to a nearly four-year-old Russia-Ukraine war. Moreover, the possibility of another Israeli strike against Iran keeps geopolitical risks in play and turns out to be another factor that contributes to the XAU/USD pair’s strong positive momentum.

Meanwhile, the aforementioned supportive fundamental backdrop, to a larger extent, offsets a generally positive tone around the equity markets, suggesting that the path of least resistance for Gold remains to the upside. Traders now look to the US economic docket – featuring the delayed release of the Q3 GDP report and Durable Goods Orders later during the North American session. Apart from this, comments from influential FOMC members could drive the USD demand and produce short-term trading opportunities around the XAU/USD pair amid the year-end thin liquidity. However, extremely overbought conditions on short-term charts warrant caution for bulls before positioning for further appreciation.

Gold daily chart

Technical outlook

The overnight breakout through the $4,375-4,380 hurdle (the previous all-time peak) and a subsequent move beyond the $4,400 mark was seen as a fresh trigger for the XAU/USD bulls. The 50-day Simple Moving Average (SMA) climbs steadily, further underscoring a firm uptrend. Price holds above the SMA, currently pegged around the $4,160 area, which should act as dynamic support. The Moving Average Convergence Divergence (MACD) line extends above the Signal line and sits in positive territory, suggesting strengthening bullish momentum. However, the Relative Strength Index (RSI) stands at 81 (overbought), which could cap gains and prompt a near-term pause.

Momentum remains strong as the uptrend is supported by the rising SMA, while the positive MACD tone reinforces buyers’ control. With the RSI stretched, a consolidation or shallow pullback could unfold, and a slide toward the rising average would not disrupt the broader bullish bias. A sustained close above support would keep the upside path intact, while any cooling of momentum would likely translate into range trading rather than a trend reversal.

(The technical analysis of this story was written with the help of an AI tool)