Gold prices are entering a phase of bearish consolidation. The understanding that the Federal Reserve may slow the pace of its interest rate cuts due to stalled progress in reducing inflation to its 2% target acts as a headwind for the yellow metal. However, a combination of factors continues to provide some support.

A slight decline in U.S. Treasury yields keeps dollar bulls on the defensive. Additionally, persistent geopolitical risks and concerns regarding the policies of U.S. President-elect Donald Trump help limit the downside for the precious metal.

Traders are also likely to avoid taking new directional positions ahead of the critical Federal Open Market Committee (FOMC) policy decision on Wednesday. This decision will be closely watched for signals on the future path of rate cuts, which could provide new impetus for the XAU/USD pair.

Technical Outlook

• Support Levels:The Asian session low near the $2640 level serves as immediate support. A break below this could drag prices toward the $2625–$2621 range, with further movement possibly targeting the monthly low and key support at $2605–$2600. A decisive break below this critical support would act as a fresh trigger for bearish momentum, paving the way for deeper losses.
• Resistance Levels:On the other hand, the $2666 level now poses a barrier, followed by the $2677 level. A break above these levels would see gold attempt to reclaim the psychologically significant $2700 level. Should gold decisively surpass this level, the subsequent rally could extend further toward the monthly high. If this high is convincingly breached, the bullish momentum is likely to accelerate.