Gold price consolidates heavy intraday losses; defends 100-period SMA on H4

Gold price (XAU/USD) maintains its heavily offered tone through the first half of the European session on Monday, albeit manages to hold above the $2,650 level and defend the 100-period Simple Moving Average (SMA) on the 4-hour chart. Scott Bessent's nomination as US Treasury Secretary clears a major point of uncertainty for markets. This, along with reports that Israel was close to reaching a ceasefire with the military group Hezbollah in Lebanon, boosts investors' confidence and turns out to be a key factor undermining demand for the safe-haven precious metal. 

Moreover, expectations that US President-elect Donald Trump's proposed policies could reignite inflation and limit the scope for the Federal Reserve (Fed) to cut interest rates act as a tailwind for the US Dollar (USD). This exerts additional pressure on the non-yielding Gold price. Meanwhile, Bessent is expected to take a more phased approach to tariffs in an attempt to rein in the budget deficit. This, in turn, offers some respite to bond investors and triggers a sharp decline in the US Treasury bond yields, which offers some support and helps limit the downside for the XAU/USD. 

Gold price remains depressed amid upbeat market mood and reviving USD demand

• The risk-on mood fails to assist the Gold price to capitalize on last week's strong gains and leads to an intraday turnaround from a three-week high on Monday.
• Scott Bessent's nomination as US Treasury Secretary and de-escalation in the long-running Middle East conflict boosts investors' confidence at the start of a new week. 
• Media reports suggest that Israel and the Lebanon-based Hezbollah militant group are on the cusp of a ceasefire deal, though an agreement is not fully formed yet. 
• Furthermore, the optimism over more business-friendly policies from the new Trump administration remains supportive of a positive tone around the equity markets.
• S&P Global's Composite US PMI rose to 55.3 in November – the highest level since April 2022 – and suggested that growth probably accelerated in the fourth quarter. 
• The recent hawkish remarks from several Federal Reserve policymakers and potential inflation surprises could support an on-hold interest rate decision in December. 
• The CME Group's FedWatch Tool indicates that traders are currently pricing in just over a 55% probability that the Fed will cut interest rates by 25 basis points next month.
• Investors this week will closely scrutinize the minutes from the November FOMC meeting, and the US Personal Consumption and Expenditure (PCE) Price Index data. 
• Bessent's conservative views on fiscal policy trigger a corrective decline in the US Treasury bond yields and prompt some US Dollar profit-taking from a two-year top. 

Gold price could weaken further once a pivotal support near 100-period SMA on H4 is broken

From a technical perspective, the sharp intraday downfall drags the Gold price below the 23.6% Fibonacci retracement level of the recent strong recovery from a two-month low touched on November 14. The subsequent decline, however, stalls near the 100-period Simple Moving Average (SMA), around the $2,660-2,658 region. Meanwhile, oscillators on the daily chart have recovered from the negative zone and are holding in positive territory on the 4-hour chart. This makes it prudent for bearish traders to wait for some follow-through selling below the 100-period SMA and the 38.2% Fibo. level, around the $2,650 area, before placing fresh bets. The XAU/USD might then accelerate the fall towards the $2,630-2,629 region, or the 50% retracement level, en route to the $2,610-2,608 zone, or the 61.8% Fibo. level.

On the flip side, the $2,677-2,678 region (23.6% Fibo. level) now seems to act as an immediate hurdle ahead of the $2,700 mark. This is followed by the Asian session high, around the $2,721-2,722 area, above which the Gold price could accelerate the move up towards the $2,748-2,750 supply zone. The momentum could extend further towards retesting the all-time peak, around the $2,790 region touched in late October.