Gold prices maintain modest gains but lack strong bullish momentum amid the Federal Reserve’s hawkish stance

Gold Price (XAU/USD) Gains Traction Amid Geopolitical Risks but Faces Headwinds from Fed’s Hawkish Stance

Gold prices (XAU/USD) extended their recovery from the $2,615-$2,614 support zone during the Asian trading session on Tuesday, showing modest positive momentum. The precious metal benefits from its status as a hedge against inflation, fueled by expectations that US President-elect Donald Trump’s proposed tariffs and protectionist policies could drive higher price levels. Additionally, ongoing geopolitical tensions, including the prolonged Russia-Ukraine conflict and instability in the Middle East, continue to attract safe-haven demand for gold.

However, the bullish momentum remains limited as the Federal Reserve signals a slower pace of rate cuts in 2025, keeping US Treasury yields elevated. This hawkish stance weighs on the non-yielding metal. Furthermore, renewed buying interest in the US Dollar (USD) adds to the challenges for gold, capping its upside potential.

Market participants are also cautious, refraining from placing aggressive bets ahead of key economic releases this week, including the FOMC meeting minutes and the closely watched US Nonfarm Payrolls (NFP) report scheduled for Wednesday and Friday, respectively.