Gold is looking to build on the previous over 2.5% rally early Tuesday, retaking the $4,450 level as prospects of further US Federal Reserve (Fed) interest rate cuts this year continue to act as a headwind to the US Dollar (USD) recovery.  

Gold cheers softer US Dollar, geopolitical woes

Gold has found fresh buyers, sitting at weekly highs above $4,450, after having dipped to near the $4,430 region earlier on. The latest leg up in Gold could be attributed to the renewed selling interest around the USD amid improving risk sentiment.

Markets shrug off the US-Venezuela geopolitical tensions, now viewing the US intervention as limited, shifting their focus back toward the expectations surrounding future rate cuts by the Fed heading in the US labor data releases due later this week.

The dovish Fed bets returned to the fore on Monday and smashed the USD alongside the US Treasury bond yields after the US ISM Manufacturing PMI declined to 47.9 in December, against the forecast of 48.3.

Slowing US economic momentum and labor market conditions continue to remain a drag on the Greenback, as markets now eagerly await the US ADP monthly Employment Change and JOLTS Job Openings data due on Wednesday before Friday’s Nonfarm Payrolls showdown.

However, if the geopolitical tensions over the US and Venezuela gather steam again, a fresh bout of USD buying could re-emerge on safe haven flows, which will likely cap the Gold price upside. All eyes are on China’s and Russia’s response to the US military aggression.

Meanwhile, the overthrown Venezuelan President Nicolas Maduro pleaded not guilty before a New York Federal court on Monday to multiple charges.

US President Donald Trump’s capture of him on Saturday rattled world leaders and left officials in Caracas scrambling to regroup, per Reuters.

Gold price technical analysis: Daily chart

In the daily chart, the 21-day Simple Moving Average (SMA) climbs above the 50-, 100-, and 200-day SMAs, signaling firm bullish alignment. All SMAs advance and the price holds above them, reinforcing buyers’ control. The 21-day SMA at $4,349.26 supports the near-term bias, while the 50-day SMA at $4,201.11 underpins the broader trend.

The 14-day Relative Strength Index (RSI) stands at 64.41, positive and shy of overbought, suggesting momentum favors the upside. Should pullbacks emerge, the rising 21-day SMA could cap losses, while a deeper retracement would look toward the 100-day SMA at $3,985.64. The bullish tone would persist while XAU/USD trades above these moving averages.

(The technical analysis of this story was written with the help of an AI tool)