Gold Price Forecast: XAU/USD soars to $2000 as US yields decline, eyes on FOMC

• The XAU/USD edged significantly higher towards the $2,005 level, with a 1.40% rally.
• US Treasury yields are declining, and the US dollar is trading soft, allowing the metal to advance.
•  The November FOMC minutes will be closely watched.

In Tuesday's trading session, the Gold spot price XAU/USD experienced a remarkable surge, breaking the $2,000 barrier and seeing a 1.40% increase. This notable performance was primarily driven by the downdraft in US yields, often seen as the opportunity cost of holding non-yielding metals and by a weak US dollar.

Today’s highlight will be the Federal Open Market Committee (FOMC) November’s minutes to be released later in the session, where investors will look for further clues on forward guidance. As for now, inflation in the US has shown signs of cooling down, as well as the labor market, while economic activity also saw signs of weakening. On the Federal Reserve (Fed) side, officials kept a cautious tone, warning that if needed, further tightening would be implemented.

In line with that, the bond market could see some volatility if investors detect any fresh clues on the Fed’s next steps. Meanwhile, the 2,5 and 10-year rates declined to 4.86%, 4.40% and 4.39% which benefited the yellow metal.

XAU/USD Levels to watch

The indicators on the daily chart reflect the dominance of buying momentum. In particular, the Relative Strength Index (RSI), nearing overbought conditions, indicates that bullish sentiment is driving the market. This surge in buying pressure is underscored by the Moving Average Convergence Divergence (MACD), which displays rising green bars, alluding to increased buying traction in the short term.

This is reinforced by the XAU/USD placement above the 20,100, and 200-day Simple Moving Averages (SMAs), suggesting that buyers have taken control over the broader market outlook. 

Support Levels: $1,980, $1,960, $1,935.
Resistance Levels: $2,010, $2,030, $2,050.

XAU/USD Daily chart