XAU Climbs Amid Geopolitical Tensions and Central Bank Buying

Gold prices climbed higher on Monday, trading up some 1.33% at $2667 per ounce, driven by a combination of factors:

Geopolitical Uncertainty: The ongoing instability in the Middle East, particularly following the fall of the Bashar al-Assad regime in Syria, has increased demand for safe-haven assets like gold.

Central Bank Buying: China’s People’s Bank of China (PBoC) resumed gold purchases in November after a six-month hiatus, bolstering the precious metal’s appeal.

Fed Rate Cut Expectations: While US job growth remained strong, a slight uptick in the unemployment rate has fueled expectations of a 25 basis point rate cut by the Federal Reserve next week. This, coupled with a generally risk-on market sentiment, has limited the US dollar’s upside potential.

Key Market Drivers:

China’s Gold Reserves: China’s gold reserves increased by 160,000 ounces in November, signaling growing confidence in gold as a strategic asset.

US Job Market: The US economy added 227,000 jobs in November, exceeding expectations. However, the unemployment rate rose to 4.2%, reinforcing expectations of a Fed rate cut.

Fed Rate Cut Probability: Market participants are now pricing in an 87% chance of a 25 basis point rate cut at the Fed’s upcoming meeting.

US Treasury Yields: A slight uptick in 10-year Treasury yields has partially offset the positive impact of the Trump trade on gold, providing some support to the US dollar.

By combining these factors, gold prices have received a significant boost, positioning the precious metal for further potential gains.