The price of gold reaches a new all-time high amid geopolitical risks

• The price of gold is trading in positive territory in the Asian session on Monday.
• US Fed interest rate cuts and geopolitical risks in the Middle East continue to support the precious metal.
• Renewed US dollar demand could cap XAU/USD’s upside.

The price of gold (XAU/USD) hits a record high on Monday, supported by a softer Greenback. The start of a Federal Reserve (Fed) monetary easing cycle and the expectation of deeper rate cuts this year could support the price of non-interest-bearing gold. In addition, rising geopolitical tensions in the Middle East could lead to a new allocation to safe-haven assets such as gold.

Looking ahead, traders will be eyeing the fast reading of US Purchasing Managers’ Index (PMI) data due later on Monday. However, the stronger-than-expected result could lift the USD and affect the USD gold price.

Daily Digest Market Movers: Gold price remains stronger amid global factors

• “The forced liquidation of short positions may push gold prices to all-time highs as the US dollar broadly holds against a basket of major currencies and rising bond yields create an unfavorable environment for gold,” FxPro analysts said.
• Hezbollah and Israel traded sharp blows on Sunday as the Lebanese militant group fired rockets deep into northern Israeli territory after facing some of the heaviest shelling in nearly a year of conflict, according to CNN.
• Philadelphia Fed President Patrick Harker said Friday that the U.S. central bank has effectively navigated a challenging economy over the past few years. Harker also said that “hard” and “soft” data are both important in decision making.
• Fed Governor Michelle Bowman noted on Friday that it was appropriate to recalibrate the level of the Fed funds rate, but she preferred a smaller first move because they have not yet reached the inflation target.
• Fed Governor Christopher Waller noted on Friday that the decision to cut interest rates by a 50 bps acceleration was the most appropriate, but the US central bank could even stop, depending on additional data.

Technical Analysis: Gold price holds above $2,600 amid overbought RSI

The price of gold rises higher that day. The precious metal is maintaining a bullish trend in the daily time frame as the price is well supported above the 100-day exponential moving average (EMA). However, the 14-day Relative Strength Index (RSI) is above the median line near 70.50, indicating overbought RSI status. This suggests that further consolidation cannot be ruled out before positioning for any upside in the near-term gold price.

The yellow metal is approaching a major resistance area near the all-time high at $2,625. A decisive break above this level could open the way to the psychological level of $2,700.

On the other hand, the first downside target appears at the round figure of $2,600. A breach of this level could see a downward move back to the resistance-turned-support level at $2,560. The next level of contention is located at $2,485, the lowest level since September 6.