Gold Weekly Forecast: Easing geopolitical tensions trigger profit-taking

• Gold closed the week in negative territory despite a late rebound.
• The technical outlook points to sellers’ hesitancy in the near term.
• Key employment data from the US and geopolitical headlines could continue to impact Gold prices.

Gold (XAU/USD) declined sharply on easing geopolitical concerns on Monday and spent the rest of the week trying to recover its losses. Employment-related macroeconomic data releases from the US could alter the expectations about the Federal Reserve’s policy decision in December and trigger the next big action in XAU/USD. 

Gold suffers heavy losses on improving risk mood

Gold started the week under heavy bearish pressure as risk flows dominated the action in financial markets following the news of US President-elect Donald Trump nominating fund manager Scott Bessent as the US Treasury Secretary. Assessing the market reaction to this development, "the market view that Bessent is a “safe hands” candidate, may see some relief rally in Treasuries from the open on Monday, as the risk of a more unorthodox candidate is priced out," noted Societe Generale analyst Stephen Spratt. "We suspect his view that tariffs should be "layered" and that initial levels being discussed are “maximalist” positions," he added.

Although the selling pressure surrounding the US Dollar (USD) and falling US Treasury bond yields helped Gold limit its losses during the European trading hours, easing geopolitical tensions caused XAU/USD to continue to push lower in the second half of the day on Monday. Following reports of Israel and Hezbollah reaching a ceasefire agreement, Gold extended its slide and lost nearly  3% on a daily basis. 

After stretching lower toward $2,600 early Tuesday, Gold managed to find a foothold and closed the day marginally higher. As the benchmark 10-year US Treasury bond yield dropped to its lowest level in nearly a month below 4.3% on Wednesday, Gold continued to edge higher and posted gains for the second consecutive day.

Meanwhile, the persistent weakness of the USD following the mixed macroeconomic data releases helped XAU/USD hold its ground midweek. The US Census Bureau reported that Durable Goods Orders increased by 0.2% on a monthly basis in October, missing the market expectation of 0.5%. The Department of Labor announced that Initial Jobless Claims declined to 213,000 in the week ending November 23 from 215,000 in the previous week. Finally, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's (Fed) preferred gauge of inflation, rose 2.3% on a yearly basis, up from 2.1% in September and in line with the market consensus, while the annual core PCE inflation edged higher to 2.8% from 2.7%.

Financial markets in the US remained closed in observance of the Thanksgiving Day holiday on Thursday, causing Gold to fluctuate in a tight range. The 10-year yield extended its weekly slide after bond markets returned to action early Friday, allowing XAU/USD to gather bullish momentum and rise above $2,650.

Gold investors’ shift focus to US labor market data

The US economic calendar will feature employment-related macroeconomic data releases next week, which could drive the market pricing of the Fed’s rate decision at the last policy meeting of the year.

On Wednesday, Automatic Data Processing will publish the private sector employment data. Markets expect private payrolls to rise by 166,000 in November. A positive surprise in this data could revive optimism about an upbeat Nonfarm Payrolls (NFP) reading on Friday and cause Gold to edge lower.

Following the 12,000 increase recorded in NFP in October, because of hurricanes and labor strikes, investors forecast a decisive rebound, with a print of 183,000 in November. A figure above 200,000 could feed into expectations for a Fed policy hold in December and boost US T-bond yields, hurting Gold prices. On the flip side, a disappointing print, at or below 150,000, could keep the hopes for another 25 basis points (bps) rate cut alive, opening the door for a leg higher in XAU/USD ahead of the weekend.

According to the CME FedWatch Tool, markets are currently seeing about a 65% probability of the Fed lowering the policy rate to the range of 4.25%-4.5% next month.

Gold technical outlook

The Relative Strength Index (RSI) indicator on the daily chart stays slightly above 50, reflecting a lack of bearish pressure. On the upside, the Fibonacci 23.6% of the uptrend coming from June and the 50-day Simple Moving Average (SMA) form the first resistance area at $2,670. In case Gold rises above this level and starts using it as support, technical buyers could show interest. In this scenario, $2,700 (static level, round level) could be seen as the next hurdle before $2,720 (static level) and $2,760 (static level). 

Looking south, first support could be spotted at $2,600 (Fibonacci 38.2% retracement) ahead of $2,570 (100-day SMA) and $2,540 (Fibonacci 50% retracement).