Gold price (XAUUSD) continues its bullish streak, marking the sixth consecutive day of gains as it remains near the all-time peak around the $2,265-$2,266 zone achieved in the previous session. The positive momentum in gold is attributed to several factors contributing to the cautious market sentiment and geopolitical risks prevailing in the global landscape. Investors' appetite for safe-haven assets like gold is bolstered amidst uncertainties, driving demand for the precious metal.
The recent release of upbeat US manufacturing data on Monday has cast doubts on the possibility of the Federal Reserve (Fed) implementing three interest rate cuts this year. This skepticism, coupled with concerns over escalating geopolitical tensions in the Middle East, has led investors to seek refuge in safe-haven assets, thereby supporting the ongoing rally in gold prices.
Despite the positive sentiment surrounding gold, the outlook is tempered by the strengthening US Dollar (USD), which has been lifted to its highest level since February 14. The reduced expectations for interest rate cuts in 2024, currently priced at 69 basis points compared to the Fed's projected 75 bps, have contributed to elevated US Treasury bond yields, further bolstering the USD. This strength in the dollar could act as a headwind for gold prices, limiting their gains in the near term.
Technical indicators suggest that the Gold price may be entering overbought territory, as reflected by the Relative Strength Index (RSI) on the daily chart. This indicates a need for potential consolidation or a modest pullback before the next upward movement. However, any corrective decline is likely to find support near the previous record high around the $2,223 region, which could attract fresh buying interest and help prevent significant downside below the key psychological level of $2,200.
Looking ahead, traders are awaiting the release of US macroeconomic data and speeches by influential Federal Open Market Committee (FOMC) members during the North American session. These events may provide further insights into the future monetary policy direction of the Fed and could influence market sentiment towards gold. In the meantime, the $2,265-$2,266 zone remains a crucial resistance level for the XAUUSD pair, with a potential break above signaling a further extension of its upward trajectory towards the $2,300 mark.
Forecast 0.5% vs Previous 0.4%
Forecast 8.760M vs Previous 8.863M
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