Gold Price Analysis: XAU/USD trimming some gains after rally above $2,015

Gold prices are on the topside of the new trading week, setting a new five-month high near $2,020 as XAU/USD continues to firm up bids after a firm bounce off of technical support in mid-November.

Markets are testing deeper into Gold bids as investors increase their bets that the Federal Reserve (Fed) is done with the current rate hike cycle, though overeager bidders continue to face frequent knockbacks.

Despite inflation slowing enough to cool the Fed’s rate hikes, markets continue to price in rate cuts occurring sooner rather than later, and the Fed remains committed to a “higher for longer” policy stance, at least until economic data sours enough to force a shift the Fed’s dot plot.

In the meantime, Gold is seeing some bolstering in the bids as money markets price in a 90% chance that the Fed will stand pat on rates for the next two consecutive policymaker meetings.

With Fed rate hike moves in the rearview mirror, the point of contention for Spot Gold markets becomes a matter of when Fed rate cuts begin. Markets are currently seeing a 25% chance of a rate cut as soon as next March, and Gold investors will be keeping a close eye on talking points from Fed officials this week.

Fed Chairman Jerome Powell will be making a late-week appearance on Friday afternoon to participate in a fireside chat at Atlanta’s Spelman College, where the Fed head will be discussing "Navigating Pathways to Economic Mobility".

XAU/USD Technical Outlook

Spot Gold finds itself trading into multi-month highs, looking to clear more topside space after climbing back over the $2,000 handle once more.

Finding chart territory north of $2,000 has proven a challenge for Gold bidders after the XAU/USD dropped below the key level back in May, trading back into the year's lows near the $1,800 region.

October saw the XAU/USD rally back into positive territory, and Gold is up over 11% from October's low of $1,810.

Spot Gold saw fresh bidding after getting pulled down into the 200-day Simple Moving Average (SMA), and buyers will be looking for a fresh round of bids if the XAU/USD sinks back towards $1,950.

XAU/USD Daily chart

XAU/USD Technical Levels