XAU/USD buyers bide their time before the next push higher

• The price of gold is struggling with $2,500 early Tuesday as buyers deepen their pace amid sour risk sentiment.
• The US dollar struggles with US Treasury bond yields on dovish Fed expectations.
• Focus remains on Wednesday’s FOMC minutes and Fed Chairman Jerome Powell’s speech on Friday.
• Gold price could see bearish trading as the daily RSI remains bullish with a symmetrical triangle in play.

The price of gold is holding its game intact at around $2,500 on Tuesday morning, striking distance from the all-time highs of $2,510. Traders are taking a breather and refraining from placing new bets on gold prices ahead of the US Federal Reserve’s (Fed) July meeting minutes and Chairman Jeremy Powell’s speech later this week.

The price of gold remains poised for a new record high above $2,500

The price of gold has entered an upward consolidation phase, following a rise to a new lifetime high and a 3% gain last week. Buyers are looking forward to a fresh and meaningful catalyst to regain upward traction, even as the US dollar (USD) continues to remain on a downward spiral alongside US Treasury yields.

The greenback faced a double whammy on Monday, with rising expectations of a Fed rate cut in September affecting US Treasury yields on the one hand. On the other hand, dovish Fed expectations lifted sentiment on Wall Street, eroding the USD’s safe-haven appeal.

However, gold prices failed to capitalize on subdued US dollar demand as fears of a potential geopolitical escalation in the Middle East eased after news reported that Israeli Prime Minister Benjamin Netanyahu had accepted a “bridging proposal ” presented by Washington to address disagreements blocking a Gaza ceasefire agreement, according to Reuters.

Heading into another data-scarce US economic calendar day on Tuesday, gold prices are overshooting as markets digest the no-change rate action by the People’s Bank of China (PBOC). Traders are getting anxious, awaiting minutes from the Fed’s July meeting and Chairman Jerome Powell’s speech in Jackson Hole on Friday for clues on the interest rate outlook.

Markets are currently pricing in a 25 basis point (bps) rate cut by the Fed next month, with the chances of a 50 basis point move off the table. Further upside in the gold price could also be limited due to the price following a larger rate cut for September.

Ahead of key Fed events, gold prices will continue to be at the mercy of risk trends and speeches from Fed policymakers. New developments surrounding the Iran-Israel conflict could also play a key role in gold price action.

Gold Price Technical Analysis: Daily Chart

After a symmetrical triangle break, risks remain tilted to the upside for the gold price.

The 14-day Relative Strength Index (RSI) is pointing south, but is holding well above the 50 level, suggesting that any pullback in the gold price could be bought.

On the other hand, should the record high of $2,510 be cleared on a sustained basis, the next relevant top target is seen at the $2,550 level. Acceptance above the latter could challenge the round level of $2,600 en route to the triangle target measured at $2,660.

However, if the gold price correction extends, immediate support is seen at the previous day’s low of $2,486, followed by triangular resistance turned into support, now at $2,468.

Further south, the psychological barrier of $2,450 will challenge bullish commitments.