Bears need to wait for a sustainable breakout and close below $2600.

Gold is rising for the second consecutive day, as geopolitical risks are driving a flow of investments into safe-haven assets. The tense geopolitical situation worldwide is a key factor driving investments toward the precious metal. However, reduced expectations for more aggressive monetary easing by the Federal Reserve are limiting the rise of gold.

Investors are convinced that the expansionary policy of U.S. President-elect Donald Trump will generate inflationary pressure, thereby limiting the possibility of further rate cuts by the Fed. This has kept U.S. Treasury yields elevated, contributing to the U.S. dollar halting its pullback from the yearly high reached last week.

The positive tone in global equity markets also limits the growth of the precious metal. These factors call for caution before confirming that the recent pullback from the historic high has run its course.

From a technical perspective, the strong overnight rise occurred amid last week's resilience below the 100-day simple moving average (SMA). While oscillators on the daily chart are recovering from lower levels, they have not yet confirmed a positive shift. As a result, any upward momentum is likely to face strong resistance around $2640. However, continued buying could trigger a short-covering rebound toward the 50-day SMA, currently located near $2655.

On the other hand, the key psychological level of $2600 serves as immediate support against further declines. A convincing breakout below this level would reveal the next significant support near $2560, followed by a drop to the 100-day SMA. Further selling below last week's swing low would act as a new trigger for the bears, paving the way for a decline to the psychological level of $2500.

Bears need to wait for a sustainable breakout and close below $2600.