Gold price moves away from multi-week high on hawkish Fed expectations

• Gold price turned lower for the second straight day on Monday, though the downside seems limited.
• The Fed’s hawkish signal remains supportive of elevated US bond yields and exerts some pressure. 
• Geopolitical risks and trade war fears might continue to offer support to the safe-haven XAU/USD.

Gold price (XAU/USD) struggles to capitalize on its modest Asian session uptick on Monday and currently trades around the $2,635 area, down for the second straight day. The US Dollar (USD) remains close to a two-year high touched last Thursday on the back of the Federal Reserve's (Fed) hawkish signal that there would be fewer rate cuts in 2025. Moreover, the optimism over US President-elect Donald Trump's expansionary policies continues to underpin the Greenback, which, in turn, is seen acting as a headwind for the non-yielding yellow metal.

That said, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East, along with concerns about Trump's tariff plans, should limit losses for the safe-haven Gold price. This, in turn, makes it prudent to wait for a strong follow-through selling before positioning for an extension of Friday's retracement slide from the $2,665 area, or a nearly three-week top. Traders now look forward to the release of the final US Services PMI and Factory Orders data for some impetus later during the North American session. 

Gold price is undermined by the prospects of a slower pace of rate cuts by the Fed

• The Institute of Supply Management (ISM) reported on Friday that the US Manufacturing PMI improved from 48.4 to 49.3 in December, pointing to signs of resilience and potential for growth.
• This comes on top of the prospects for a slower pace of rate cuts by the Federal Reserve in 2025 and remains supportive of elevated US Treasury bond yields, undermining the Gold price. 
• The yield on the benchmark 10-year US government bond reached its highest point since May 2 and assists the US Dollar in holding steady just below a two-year high touched last Thursday.
• San Francisco Fed President Mary Daly said on Saturday that despite significant progress in lowering price pressures over the past two years, inflation remains uncomfortably above the 2% target.
• Investors this week will confront the release of important US macro releases, including the closely-watched Nonfarm Payrolls report on Friday, ahead of the next Fed meeting later this month. 
• Israeli forces continued to attack medical facilities in the Gaza Strip and more Israeli raids were reported in the occupied West Bank on Sunday, while the Houthis have intensified their attacks on Israel.
• Ukraine said on Sunday that it had carried out surprise attacks against Russian forces in several areas in Kursk. The Russian Defence Ministry also confirmed the Ukrainian counterattacks.

Gold price could retest December swing low once the 100-day SMA support is broken

From a technical perspective, any subsequent slide is likely to find decent support near the 100-day Simple Moving Average (SMA), currently pegged near the $2,625 region. This is followed by the $2,600 mark, below which the Gold price could drop to the December monthly swing low, around the $2,583 area. Some follow-through selling will be seen as a fresh trigger for bearish traders and pave the way for deeper losses.

On the flip side, momentum beyond the Asian session high, around the $2,647 region, could lift the Gold price back to the $2,665 area, or the multi-week high. The subsequent move up could extend further towards an intermediate resistance near the $2,681-2,683 zone en route to the $2,700 mark. The latter should act as a pivotal point, which if cleared decisively will set the stage for an extension of a two-week-old uptrend.