The Gold Price Continues its Record-Breaking Ascent
- Gold price reaches a new high on Monday, continuing its upward trend.
- Central banks’ rate cuts support XAU/USD.
- Geopolitical tensions and US political uncertainty bolster the precious metal.
The Gold price (XAU/USD) has been on a remarkable climb for the fifth consecutive day, hitting a fresh record high around the $2,732-2,733 mark during the Asian trading session on Monday. This surge marks the seventh positive day out of the last eight, confirming a breakout above the $2,700 level. The current monetary policy landscape, characterized by rate cuts from major central banks, is favorable for gold as a non-yielding asset. Additionally, ongoing geopolitical risks in the Middle East and political uncertainties in the US provide further support for the safe-haven appeal of gold.
However, several factors suggest caution for investors looking to capitalize on this bullish momentum:
The US Dollar Impact
- The US Dollar’s recent strength, driven by market expectations of modest rate cuts by the Federal Reserve, may pose a challenge for gold prices.
- Elevated US Treasury bond yields, a result of the Fed’s stance on rates, could hinder further gains in the Gold price.
Risk-On Sentiment
- China’s stimulus measures and a generally risk-on market sentiment could limit the upside potential for XAU/USD.
Daily Digest Market Movers: The Factors Driving Gold Price Momentum
- Continued tensions in the Middle East, particularly between Israel and Iran-backed groups, contribute to the safe-haven appeal of gold.
- US political uncertainty, with a closely contested election between Donald Trump and Vice President Kamala Harris, adds to the demand for safe-haven assets like gold.
- Global central banks, including the European Central Bank and the Federal Reserve, are pursuing accommodative monetary policies, further supporting the Gold price.
Technical Outlook: Caution Advised for Bullish Traders
While the recent strength in Gold price signals a bullish trend, the Relative Strength Index (RSI) suggests slightly overbought conditions. Traders should be wary of a potential pullback or consolidation before entering new positions to avoid a correction in the market.
Key technical levels to watch for:
- $2,700 acts as immediate support, with potential downside towards $2,662-2,660.
- Further support levels lie at $2,647-2,646 and $2,630, with a break below signaling a deeper correction towards $2,600.