Gold prices rose slightly on Tuesday ahead of the release of U.S. inflation data for October, but remained below $1,950.
Investors are trading weakly ahead of the U.S. Consumer Price Index data, which could shed some light on the Federal Reserve's outlook for future monetary policy.
Markets are forecasting that annual inflation will slow to 3.3% in October from 3.7% in September, while the core CPI will rise to 4.1%. If the data indicates that inflation is rising or holding steady, the Fed may shift to a more hawkish policy of raising interest rates.
According to the latest CME Group Fedwatch data, traders are pricing in a 15% chance that the Fed will raise rates by 25 basis points at its December meeting and a 25% chance at its January 20-24 meeting.
It is worth noting that investors will be closely watching the meeting between U.S. President Joe Biden and Chinese President Xi Jinping, which will take place this week during the Asia-Pacific Economic Cooperation summit.
Renewed tensions between the U.S. and China could weigh on the U.S. dollar and support gold bullion prices.
Markets will also continue to monitor news from the Middle East, as an escalation in the military conflict between Israel and Palestine could increase demand for gold.
In addition, investors will be watching speeches from a number of Fed policymakers: Philip Jefferson, Michael Barr and Austin Goolsbee.
The yield on the 10-year U.S. Treasury note continues to fall to 4.62%.
The XAU/USD is currently trading at $1,945.59.
The next resistance level is at $1,950, a break of which will take the price of gold to $1,970. However, if the price fails to consolidate above $1,950, it will fall towards the support at $1,930, a break of which will open the way to $1,900 and below.