Gold Price Forecast: XAU/USD flat lines above $2,600 as traders await fresh catalysts

• Gold trades flat around $2,625 in Monday's early Asian session. 
• More cautious approach to monetary easing next year from the Fed drags the Gold price lower. 
• Softer US PCE inflation data, the upturn in China's Gold demand and geopolitical risks might the downside for XAU/USD.  

Gold price (XAU/USD) holds steady near $2,625 during the early Asian session on Monday. The hawkish stance of the Federal Reserve (Fed) might weigh on the yellow metal. However, the softer Greenback after the weaker inflation report could cap its downside.

The Fed lowered interest rates in the December meeting as expected but signaled that it will slow the pace at which borrowing costs fall any further. The Fed's dot plot, a chart that projects the future path of interest rates, indicated a half-percentage point rate cut in 2025, compared with a full percentage cut projected in September. This, in turn, continues to lift the US Dollar (USD) and undermine the USD-denominated Gold as higher real interest rates increase the opportunity cost of gold. 

On the other hand, softer-than-expected US inflation data could help limit the precious metal's losses. The US inflation, as measured by the Personal Consumption Expenditures (PCE) Price Index, rose to 2.4% YoY in November from 2.3% in October. The reading came in below the market consensus of 2.5%. Meanwhile, the Core PCE jumped 2.8% in November, compared to 2.8% In the previous reading, but below the 2.9% expected.

The upturn in Gold demand in China might contribute to the yellow metal's upside as China is the world's largest Gold consumer nation. With less than 6 weeks until Chinese New Year, the world's heaviest gold-buying festival overtakes Diwali in India. Additionally, the ongoing geopolitical tensions in the Middle East could boost the safe-haven flows, benefiting the Gold price.