On Tuesday (December 10th), spot gold continued yesterday's gains and is currently trading at $2663.82 per ounce, with a slight increase of 0.14% for the day, approaching a two-week high. Multiple factors have jointly driven the upward trend of gold prices, with strong support from fundamental news such as market concerns about the global geopolitical situation, increased demand for safe assets, and expectations of interest rate cuts by the Federal Reserve.

Geopolitics and risk aversion boost gold prices

Recently, geopolitical risks have significantly increased, with the continued deterioration of the "Russia Ukraine situation" and political turmoil in South Korea and France causing concerns in the market about global stability. In addition, the situation in the Middle East has added variables, with Syrian rebel forces achieving a partial victory and news of President Bashar al Assad's exile in Russia exacerbating market tensions. As a result, safe haven funds flowed into the gold market, driving up the price of gold.

At the same time, the news that the People's Bank of China ended its seven month suspension of gold purchases and increased its holdings of 160000 ounces of gold in November further boosted market confidence. As one of the world's largest consumers of gold, China's move indicates signs of a rebound in official demand for gold, providing strong support for the price of gold.

The impact of Federal Reserve policy expectations on gold prices

The expected changes in the Federal Reserve's monetary policy are also a key factor in the recent fluctuations in gold prices. According to CME Group's FedWatch tool, current market pricing shows that the probability of the Federal Reserve cutting interest rates by 25 basis points at this month's meeting exceeds 85%. This not only depressed the yield of US treasury bond bonds, but also put pressure on the trend of the US dollar, thus further enhancing the attractiveness of gold.

However, recent speeches by hawkish officials within the Federal Reserve indicate that inflation remains their focus, and the market expects the interest rate cut cycle to pause thereafter. This expectation limits the short-term increase in gold prices. In addition, Trump's remarks on tariffs have further intensified market concerns about rising inflation. This complex macro environment may exacerbate the volatility of the gold market in the short term, but the overall trend still leans towards an upward trend.

Technical analysis: Key support and resistance levels

From a technical perspective, spot gold has successfully broken through and closed above the key resistance level of $2650, providing new momentum for bulls. The oscillation indicators on the daily chart show positive upward momentum, suggesting that gold prices may continue to challenge the $2700 mark and further touch the supply range of $2720-2722.

But at the same time, attention should be paid to the role of the support level, as $2650, which was previously a resistance level, has now transformed into an important short-term support. If it falls below this level, the gold price may further retrace to the $2625-2620 range, and even test the $2600 integer level. If it breaks below $2600, it may open up even greater downward space, with a target towards the November low of $2537-2536.

Outlook: Upward momentum or sustained

Overall, the upward momentum of spot gold remains stable. Under the combined effect of safe haven demand, weak US dollar, and geopolitical risks, gold prices are expected to continue to rise in the short term. But before the Federal Reserve meeting and the release of the US Consumer Price Index (CPI) data, the market may show a volatile pattern. If CPI data shows easing inflationary pressures, it may provide conditions for further bullish efforts in gold.

In the medium to long term, the gold market is still strongly supported by fundamentals. Investors should closely monitor the latest developments in the Federal Reserve's policy direction and geopolitical situation, which will continue to affect market sentiment and gold price trends.