Gold Price Forecast: XAU/USD edges higher above $2,600 amid light trading

• Gold price gains traction to near $2,625 in Monday's early Asian session. 
• Trump's administration could boost Gold price amid uncertainty. 
• The hawkish stance of the US Fed might cap the upside for the precious metal. 

Gold price (XAU/USD) attracts some buyers to around $2,625 during the early Asian session on Monday. Donald Trump's tariffs and trade policies could trigger trade conflicts, supporting the yellow metal. However, the outlook for fewer Federal Reserve (Fed) rate cuts in 2025 might cap the upside for Gold price. Trading volume is lighter than usual ahead of the New Year holiday. 

Donald Trump's potential return to the White House might intensify global trade tensions, fueling geopolitical crises and likely lifting the Gold price. "Trade tensions, potential conflicts, and unpredictable policies under his leadership might drive investors toward gold as a safe-haven asset," said the managing director of RiddiSiddhi Bullions Limited. 

Additionally, the escalating geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war could boost the Gold price, a traditional safe-haven asset. On Sunday, Israeli forces carried out attacks on two hospitals in northern Gaza, including a strike on the upper floor of al-Wafaa Hospital in Gaza City, which killed at least seven people and critically wounded others.

On the other hand, the rising expectations for fewer Fed rate cuts could underpin the Greenback and exert some selling pressure on the USD-denominated commodity price. A strengthening USD generally weighs on bullion, reducing its appeal to investors seeking non-yielding assets.