XAU/USD Forecast: Gold Prices could run into sellers at $2,655 on the road to recovery

• Gold price builds on the previous recovery above $2,600 early Tuesday.
• Geopolitical risks and US Dollar pullback alongside Treasury bond yields power Gold price
• Gold price eyes 50-day SMA resistance at $2,655 as the daily RSI remains bearish

The recovery in the gold price continues into Asian trading on Tuesday, reversing half of the previous week’s decline. The forthcoming speeches from US Federal Reserve (Fed) policymakers and the geopolitical tensions between Russia and Ukraine continue to be the primary focus.

The gold price has increased as a result of the reduction in the yields on US Treasury bonds.
Gold prices have maintained their stability for the second day in a row, with the recent retracement in US Treasury bond yields across the curve providing support. This has fueled the corrective decline in the US Dollar (USD) against its major currency rivals.

US bond yields have entered a correction phase as investors continue to be cautious about the potential fiscal and trade policies that US President-elect Donald Trump may implement in order to affect the economic and inflation outlook.

Additionally, the gold price has benefited from the recent escalation in geopolitics between Russia and Ukraine, which was facilitated by the authorization by US President Joe Biden for Ukraine to employ American Army Tactical Missile Systems (ATACMS) to conduct strikes within Russia on Sunday. Moscow’s decision to permit the use of long-range US weapons within Russia was announced subsequent to the deployment of North Korean ground personnel to augment its own forces.

In addition, the brilliant metal is expected to benefit from the anticipation of additional stimulus measures from China. The main consumer of gold worldwide is China. Chinese state media, Securities Journal, reported that analysts anticipate additional reductions in the Reserve Requirement Ratio (RRR) this year.

It should be noted that China is the world’s largest consumer of gold, and any actions taken by the local government to enhance economic performance appear to be beneficial for the precious metal. Nevertheless, it is uncertain whether the gold price will be able to maintain its recovery momentum as traders become more cautious in anticipation of additional guidance on the Federal Reserve’s interest rate outlook from the central bank meetings scheduled for Tuesday and later this week.

In addition, traders may choose to forgo placing new bets on the yellow metal in anticipation of the earnings report of the American AI behemoth, Nvidia Inc. This could have a substantial impact on the broader market sentiment and the value of the USD, ultimately affecting the USD-sensitive Gold price.