Gold flat lines above $2,700; downside seems limited amid reviving Fed rate cut bets

• Gold price attracts some dip-buying amid a fresh US Dollar selling, though it lacks follow-through.
• Bets that the Fed will pause its rate-cutting cycle cap gains for the XAU/USD amid the risk-on mood. 
• Traders now keenly await US President-elect Donald Trump’s inaugural address for a fresh impetus.

Gold price (XAU/USD) struggles to capitalize on its intraday bounce and flat lines above the $2,700 mark during the first half of the European session on Monday. The risk-on environment – as depicted by a generally positive tone around the equity markets – turns out to be a key factor acting as a headwind for the safe-haven precious metal. Traders also seem reluctant to place aggressive bets and opt to wait for US President-elect Donald Trump’s inaugural speech later today.

In the meantime, signs of abating inflation in the US fueled speculations that the Federal Reserve will cut interest rates twice this year. This, in turn, prompts fresh selling around the US Dollar (USD), which has now reversed Friday’s move up and lends support to the non-yielding Gold price. Given that the US banks will be closed in observance of Martin Luther King Jr. Day, the mixed fundamental backdrop warrants caution before placing directional bets around the XAU/USD. 

Gold price traders seem non-committed, opt to move to the sidelines ahead of Trump’s inauguration

• Gold price registered gains for the third consecutive week amid bets that the Federal Reserve may not exclude the possibility of cutting interest rates further in 2025 and benefits the Gold price.
• The expectations were lifted by the US Producer Price Index (PPI) and Consumer Price Index (CPI) released last week, which indicated that inflationary pressures in the US eased in December. 
• Adding to this, Fed Governor Christopher Waller said last Thursday that inflation is likely to continue to ease and allow the US central bank to cut interest rates sooner and faster than expected.
• The US Dollar struggles to capitalize on Friday’s positive move, which, along with concerns about US President-elect Donald Trump’s disruptive trade tariffs, underpins the safe-haven XAU/USD. 
• Against the backdrop of the Israel-Hamas ceasefire deal, hopes that Trump might relax curbs on Russia in exchange for a deal to end the Ukraine war remain supportive of the positive risk tone.
• Furthermore, the US central bank is expected to pause its rate-cutting cycle later this month amid expectations that Trump’s policies could stoke inflation, capping the non-yielding yellow metal. 
• Traders might also refrain from placing aggressive directional bets ahead of Trump’s inaugural address later this Monday and a US holiday in observance of Martin Luther King Jr. Day.

Gold price weakness below the $2,700-2,690 pivotal support could pave the way for deeper losses

From a technical perspective, any subsequent move up is likely to face some resistance near the $2,715 area ahead of the $2,724-2,725 region, or a one-month top touched last Thursday. Given that oscillators on the daily chart have been gaining positive traction, some follow-through buying should pave the way for a move towards the $2,745 intermediate hurdle en route to the $2,760-2,762 area. The XAU/USD might eventually aim towards challenging the all-time peak, around the $2,790 region touched in October 2024.

On the flip side, any meaningful slide below the $2,700-2,690 immediate support could be seen as a buying opportunity and remain limited near the $2,662-2,662 region. The latter should act as a pivotal point, below which the Gold price could fall to the $2,635 zone en route to the $2,620-2,615 confluence – comprising a short-term ascending trend-line extending from the November swing low and the 100-day Exponential Moving Average (EMA).