On Thursday, the price of gold reached a new record high, driven by expectations of a Federal Reserve rate cut in June. The US dollar remained weak, supporting the XAU/USD, and the safe-haven appeal of gold was further boosted by a softer risk tone and ongoing geopolitical tensions.
Despite concerns about overbought conditions, gold continued its positive momentum for the seventh consecutive day during the early European session.
The belief that the Federal Reserve is likely to implement rate cuts in June contributed to a defensive stance among USD bulls, prompting increased interest in the non-yielding yellow metal.
Additional support for gold came from a generally cautious market sentiment and ongoing economic challenges in China. Minneapolis Fed President Neel Kashkari played down speculations of aggressive policy easing, leading to a modest bounce in US Treasury bond yields, which helped limit the downside for the US dollar.
Looking ahead, investors are focusing on Powell's testimony, US Weekly Initial Jobless Claims, and the upcoming NFP report on Friday for market direction.
From a technical standpoint, gold recently broke through key resistance levels, triggering a bullish sentiment. However, the Relative Strength Index (RSI) indicates overbought conditions on the daily chart, suggesting the need for potential consolidation or a modest pullback before considering further upside.
Despite this, the overall trend suggests a possible climb towards the psychological $2,200 mark.
In terms of potential corrections, buying opportunities may arise near the $2,100 level, acting as a pivotal point. A decisive break below this level could lead to a retracement towards the $2,064-2,062 range, indicating a shift in bias in favor of bearish traders.
Paraphrasing text from "FX Street" all rights reserved by the original author.
