As investors prepare for the hawkish interest rate cuts announced by the Federal Reserve after the last monetary policy meeting of this year, cautious sentiment is quietly infiltrating the gold market.

Although gold was still on the defensive before the Federal Reserve's decision, an analyst said that the central bank's information could trigger a larger pullback in the precious metal market.

Kelvin Wong, Senior Market Analyst at OANDA, pointed out in his latest gold report that gold prices continue to face resistance above $2700 per ounce. He added that gold is facing significant resistance as bond yields rise and inflation concerns persist.

He stated in the report, "Financial instruments traded in the market have begun to anticipate further increases in US inflation expectations, stemming from the trend of US 5-year and 10-year breakeven inflation rates. Since the start of the Fed's current interest rate cut cycle, these two indicators have been on the rise. The main catalyst for the mid-term upward trend of US 5-year and 10-year breakeven inflation rates is the policies proposed by Trump Economics 2.0, which include greater corporate tax cuts and higher trade tariffs on US imports. High tariffs may restore inflationary pressures in 2025 and beyond

Wong also emphasized that after testing the support level of 1.90% last week, the actual yield of 10-year US Treasury bonds has rebounded significantly. He said that pushing towards 2.29% would increase the opportunity cost of holding gold, making it less attractive to investors.

Although the medium-term risk of gold is increasing, Wong points out that gold is still in a stable long-term upward trend.

He said, "Gold may be supported by the long-term impact of the increased trade tariffs in Trump's Economics 2.0, which could lead to further deglobalization. This deglobalization could pose obstacles to global economic growth, in which case gold may increase demand due to its defensive hedging factors

Since reaching a historic high of $2789.95 on October 31, the gold price has been oscillating in a consolidation pattern and there is a risk of a correction decline lasting for several weeks, which could retest its key 200 day moving average in a broader uptrend since October 6, 2023.

From a technical perspective, Wong stated that gold prices must maintain the medium-term support level of $2537 per ounce, and a drop to this level could trigger a new bullish momentum. But if not, the next support zone is between $2484 and $2415 per ounce.

On the other hand, breaking a new high in gold prices will render the correction of the downward trend ineffective and restore the upward trend. The goal is to take the next medium-term resistance range of $2850 to $2886 as the first step, "he said.