Gold Price Forecast: XAU/USD stays firm above $2050 amid geopolitical tensions

• Gold’s continued rise backed by risks in the Middle East involving Israel-Hamas, and Houthis vs. US/UK conflict.
• Market expectations of significant Fed rate cuts in 2024 boost Gold's appeal against a weakening Dollar.
• Focus on upcoming US economic data and Fed officials' speeches for further insights into Gold price dynamics.

Gold price extended its gains for three straight days and stayed firm above the $2050 figure on Monday amid thin volume conditions sponsored by a holiday in the United States (US). In the meantime, geopolitical risks, remained the main driver, as the XAU/USD trades at $2055, up by 0.32%, after hitting a low of $2046.

XAU/USD rallies on sour sentiment weighing on risk-perceived assets

Tensions in the Middle East stay high as the Israel-Hamas conflict has extended to a hundred days, while the Houthi militia continued to launch missiles against ships and vessels that would like to go through the Red Sea. Consequently, the US and the UK retaliated vs. the Iran-backed group, attacking the strategic objectives of the group and spurring risk aversion in the financial markets.

Besides that, increasing odds that the US Federal Reserve (Fed) would cut rates by 170 basis points in 2024 gave the precious metals a leg-up against the already battered Greenback. Additionally, to this, US Treasury yields continued to edge lower, particularly the short-end of the curve, as the US 10s-2s yield curve is at -0.20 basis points, as the 2-year note rate coupon is at 4.14%, while the 10-year benchmark yields 3.941%

Ahead of the week, the US economic docket will feature Fed speakers led by Governor Christopher Waller, Michael Barr, Michelle Bowman, and the New York Fed President John Williams on Tuesday and Wednesday. Data-wise, the calendar will feature Retail Sales, Industrial Production, and the University of Michigan’s (UoM) Consumer Sentiment.

XAU/USD Price Analysis: Technical outlook

The daily chart portrays the yellow metal as neutral-upwards biased, but in the short term, it has remained sideways. For a bullish continuation, buyers must crack the December 28 high of $2088.48 to challenge the $2100 figure. A breach of the latter will expose the all-time high at $2146.79. On the flip side, if sellers drag Gold’s spot price below the 50-day moving average (at $2019, that could pave the way for testing the $2000 figure.