Gold Price Analysis: XAU/USD stabilizing after a dip into $1,960

XAU/USD is holding on the top end after hitting fresh five-month highs last week, just inches away from the $2,000/ounce key price level.

Gold momentum remains firmly bullish as XAU/USD runs up the charts, with investors increasingly concerned about higher-for-longer interest rates destabilizing global economic growth, and the yellow metal has been bolstered in recent weeks as US Treasury yields hit highs not seen in over fifteen years, with the 10-year T-note specifically hitting 4.9% last week.

Spot Gold prices are easing back for Monday trading as investor concerns about geopolitical tensions in the Middle East go slack. Diplomatic efforts to ease tensions in the Israel-Hamas Gaza Strip are softening market risk aversion and giving investors a much-needed rebound in risk appetite, sending risk bids higher and cracking open safe haven assets like the US Dollar (USD) and Gold.

Key economic growth and inflation figures are due this week from the US, and Gold traders will be keeping a close eye on the prints in case the data sours market expectations of rate cuts to come from the US Federal Reserve (Fed) next year.

Money markets are pricing in a 97% chance that the Fed stands pat on interest rates at their next meeting, and the key to economic data this week will be whether or not markets will need to adjust their hopes for rate cuts to begin in the US. If inflation fails to weaken as much as investors are hoping for, the Fed may be forced to keep rates high for even longer than anticipated.

US Purchasing Manager Index (PMI) figures drop on Tuesday, with the Manufacturing and Services components both expected to see minor declines; Wednesday sees a speech from Fed Chairman Jerome Powell, who will be delivering opening remarks when the Moynihan Lecture in Social Science and Public Policy kicks off in Washington, DC; Thursday sees an advance reading of US Gross Domestic Product, with the annualized third quarter seen expanding from 2.1% to 4.2%; and Friday closes out the week with US Personal Consumption Expenditure (PCE) Index figures, and September is expected to show consumers having to spend even more to cover their costs, with the monthly number forecast to increase from 0.1% to 0.3%.

A meet or beat for US PCE on Friday could flash warning signs that inflation remains stickier than policymakers anticipated, and could see a late-week snap in risk appetite as investors fear firm interest rates for most of 2024.

XAU/USD Technical Outlook

Despite Monday's softening on Gold bids, the XAU/USD looks exceedingly bullish in the short term, with Spot Gold prices climbing over 10% bottom-to-top from ear October's bottoms near $1,810.

Gold's current bullish bid sees XAU/USD prices easily climb over the 200-day Simple Moving Average (SMA currently testing the waters near $1,931, and Gold is now set to take another run at the $1,980 level that rejected bullish momentum back in July.

XAU/USD Daily Chart

XAU/USD Technical Levels