Market Analysis

Gold (XAU/USD) finds support near the $2,638 level during the early European session on Tuesday, pausing its modest pullback from the previous day's one-week high. Ongoing geopolitical risks and concerns about escalating tensions in the Middle East are providing support for the safe-haven asset.

However, further gains in Gold remain limited by sustained US Dollar (USD) strength, bolstered by expectations that the Federal Reserve (Fed) will not pursue aggressive policy easing. Additionally, disappointment over China's fiscal stimulus has dampened investor confidence, contributing to the cap on XAU/USD's upward movement.

Technical Outlook: Gold faces resistance near the $2,666-$2,667 region

Technically, the overnight swing high around the $2,666-$2,667 region now poses a key resistance level. A decisive break above this zone could propel the Gold price back towards its all-time high, around the $2,685-$2,686 level reached in September. The next target would be the psychologically important $2,700 mark, which, if breached, could signal the continuation of Gold’s multi-month uptrend.

On the downside, any drop below the $2,632-$2,630 support zone is expected to attract fresh buying interest, with further support seen around the $2,600 level. A failure to defend this area could trigger a bearish move, making Gold vulnerable to a sharper decline towards the $2,560 support region. A deeper correction could see prices test the $2,535-$2,530 range, with the $2,500 psychological level as the next target.

Paraphrasing text from "FX Street" all rights reserved by the original author.