Gold Price Forecast: XAU/USD flat lines above $2,650 ahead of US PMI release

• Gold price trades flat around $2,660 in Friday’s early Asian session.
• Safe-haven demand and buying by global central banks lift the Gold price. 
• The expectation of a slower pace of the US interest rate reduction might cap the upside for the yellow metal.

The Gold price (XAU/USD) consolidates its gains near $2,660 after reaching a two-week high during the early Asian session on Friday. The safe-haven flows amid the geopolitical tensions provide some support to the precious metal. The US ISM Manufacturing Purchasing Managers Index (PMI) for December will take center stage later on Friday. Also, the Richmond Fed President Thomas Barkin is scheduled to speak.

Russia carried out a drone attack on Kyiv early Wednesday, causing damage in two districts, while Israel targeted a Gaza City neighbourhood, per Reuters. Investors will closely monitor the development surrounding geopolitical risks. Any signs of escalating tensions in the Middle East and Russia-Ukraine could boost the Gold price, a traditional safe-haven asset. 

Central bank purchasing activities could contribute to the yellow metal’s upside. Global central banks bought 694 tonnes of gold during the first nine months of 2024. “We think central bank interest will be a strong base for the buying next year,” noted Henrik Marx, global head of trading at Heraeus Precious Metals, which expected that gold could reach highs of $2,950 per troy ounce in 2025. 

On the other hand, the slower pace of further rate cuts by the US Federal Reserve (Fed) might weigh on the non-yielding asset. The US central bank decided to lower the interest rates in December but signalled that borrowing costs will fall more slowly than previously expected this year.