The price of gold (XAU/USD) surged to a record high near $2,441 during the Asian session on Monday, driven by renewed hopes for interest rate cuts from the US Federal Reserve (Fed) and rising geopolitical tensions in the Middle East. Heightened tensions between Russia and Ukraine, with both nations launching attacks against each other over the weekend, also bolstered safe-haven demand.
Later today, gold traders will closely monitor speeches from several Fed officials, including Bostic, Barr, Waller, Jefferson, and Mester, for insights into the future path of monetary policy. Any cautious approach or hawkish comments from these Fed officials could potentially limit the precious metal’s upside.
Technical Analysis: Bullish Momentum with Eyes on Overbought RSI Condition
Gold prices are trading with a positive bias, breaking above an ascending trend channel that has been forming since May 2. The four-hour chart shows that the yellow metal maintains a bullish outlook as it trades above the 100-period Exponential Moving Average (EMA), with the Relative Strength Index (RSI) holding above the midline around 82.50. However, the overbought RSI condition suggests that further consolidation cannot be ruled out before positioning for any near-term upside.
An all-time high of $2,440 acts as an immediate resistance level for XAU/USD. A decisive break above this level could lead to a rally towards the potential upside barrier at the $2,500 psychological level.
On the downside, the resistance-turned-support level at $2,415 will be the first target if gold prices retreat. The crucial contention level is located at the $2,400 round number, followed by the low of May 16 at $2,370.
Key Factors Driving Gold Prices
- Fed Rate Cut Hopes: Speculation about potential interest rate cuts by the US Federal Reserve has fueled optimism among gold investors, pushing prices higher.
- Geopolitical Tensions: Renewed conflicts in the Middle East and between Russia and Ukraine have increased safe-haven demand for gold.
- Technical Indicators: Gold’s break above the ascending trend channel and strong positioning above the 100-period EMA support a continued bullish trend, though the overbought RSI indicates a possible near-term consolidation.
Outlook
Gold’s bullish momentum remains intact as long as it stays above key support levels. Traders will be paying close attention to the Fed speeches later today for any signals that could affect the precious metal’s trajectory. A break above the all-time high of $2,440 could open the door to new heights, while maintaining support around $2,415 and $2,400 will be crucial for sustaining the upward trend.
