14 Jan 2025

• Gold price regains positive traction amid a modest pullback in the US bond yields.
• Hawkish Fed expectations favor the USD bulls and should cap the precious metal.
• The risk-on impulse might further contribute to keeping a lid on the XAU/USD pair.
• Gold prices (XAU/USD) maintain a positive outlook during the early European session on Tuesday; however, they lack strong bullish momentum and remain below the one-month high reached the previous day. Reports indicate that top economic advisers to US President-elect Donald Trump are considering a gradual increase in tariffs to avoid a sudden rise in inflation, which has led to a slight decline in US Treasury bond yields. This situation keeps the US Dollar (USD) subdued, remaining below the two-year high achieved on Monday, thereby providing some support to the commodity.
  
  In addition, diminishing concerns regarding potential disruptive trade tariffs under Trump 2.0 have enhanced investor confidence. The positive US Nonfarm Payrolls (NFP) report released on Friday has further solidified expectations for a more measured approach to interest rate cuts this year. This development serves as a supportive factor for US bond yields and the USD, which in turn restricts any significant upward movement in the non-yielding Gold price. Traders are now anticipating the release of the US Producer Price Index (PPI) for short-term direction later in the North American session.

• Gold price draws support from slideing US bond yields; lacks follow-through buying

  Bloomberg reported on Monday, referencing sources familiar with the situation, that President-elect Donald Trump's economic advisors are contemplating a strategy to incrementally raise tariffs on a monthly basis. This strategy is designed to enhance negotiating power and mitigate the risk of a sudden inflation surge, resulting in a slight decline in US Treasury bond yields and an increase in demand for gold.
  
  The robust US employment report has solidified expectations that the Federal Reserve will adopt a cautious approach while implementing rate cuts this year, which has contributed to the US Dollar stabilizing after a decline from a two-year peak on Monday. The Fed's assertive stance is also expected to restrain the corrective decrease in benchmark 10-year US Treasury bond yields from a 14-month high and limit any further increases in the non-yielding gold market.
  
  President-elect Donald Trump has consistently vowed to resolve the conflict in Ukraine and has stated his intention to meet with Russian President Vladimir Putin "very quickly" following his inauguration next week. The US has indicated that a ceasefire agreement is nearing completion, while Hamas has reported positive progress in negotiations. Two Israeli officials have confirmed that Hamas will release 33 hostages as part of the initial phase of the ceasefire arrangement.
  
  Investors are now anticipating significant inflation data, beginning with the Producer Price Index to be released later today, followed by US consumer inflation figures on Wednesday, which are expected to provide substantial market direction.

  Gold price technical setup favors bullish traders; $2,657-$2,656 support holds the  From a technical perspective, any subsequent strength beyond the $2,676-2,677 area is likely to confront some resistance near the $2,690 zone ahead of the $2,700 mark. Some follow-through buying beyond the latter will set the stage for an extension of over a three-week-old uptrend and lift the Gold price to the $2,716-2,717 hurdle en route to the December monthly swing high, around the $2,726 region.

  Gold price technical setup favors bullish traders; $2,657-$2,656 support holds the key

  On the flip side, the $2,657-2,656 area, Monday's low, might continue to protect the immediate downside. A convincing break below, however, could make the Gold price vulnerable to accelerate the downfall towards the $2,635 region. The downward trajectory could extend further towards the $2,610 confluence, comprising the 100-day Exponential Moving Average (SMA) and a multi-week-old ascending trend line.