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Gold prices drew support from escalating geopolitical risks and bets on the U.S. Federal Reserve cutting rates, helping the metal approach $2,660. Favorable U.S. Producer Price Index (PPI) data suggested an easing inflation trend, bolstering expectations of a Fed rate cut in November. However, the possibility of aggressive rate cuts was limited, keeping U.S. Treasury yields elevated and the U.S. Dollar strong, which capped gold's upward momentum. Geopolitical tensions in the Middle East and economic uncertainty in China offered further support for safe-haven bullion. With U.S. markets closed for Columbus Day, the gold market's movement will likely hinge on USD fluctuations and geopolitical developments.

Key Highlights

* Gold prices near $2,660 on safe-haven demand and rate cut hopes.

* U.S. PPI data supports easing inflation outlook, aiding gold.

* Strong U.S. Dollar and Treasury yields cap upside potential.

* Middle East tensions boost demand for safe-haven assets.

* Market focus remains on USD dynamics and geopolitical risks.

Gold prices found support on the first day of the week, climbing near $2,660 as investors sought safe-haven assets amid escalating geopolitical tensions in the Middle East and growing expectations for U.S. Federal Reserve rate cuts. The U.S. Producer Price Index (PPI) for September showed a deceleration in inflation, fueling hopes that the Fed would lower interest rates further. However, with the likelihood of a more aggressive easing being limited, the strength of the U.S. Dollar and elevated U.S. Treasury yields continue to weigh on the yellow metal's upward movement.

The markets have largely priced in a 25 basis point rate cut by the Fed in November, which is keeping the U.S. Dollar strong near a two-month peak and bond yields above 4%. This limited the gains for gold, despite a positive technical setup. Additionally, economic data from China over the weekend showed slower inflation, coupled with the lack of specifics on fiscal stimulus, which could impact global market sentiment.

Geopolitical risks and economic uncertainties are likely to provide continued support for gold prices. Still, the metal faces significant resistance at the $2,662 level, and a convincing break above could push it towards an all-time high of $2,686. Conversely, any decline may find support near $2,630, with further downside risks towards $2,600 and $2,560 levels.

Finally

Gold's near-term outlook remains bullish, but sustained gains will require a break above $2,662, while a dip below $2,630 may trigger further declines.

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