These analysts say gold currently looks “tactically overbought” by Investing.com

Investing.com — Gold currently appears “tactically overbought” after a recent surge in the yellow metal’s price to record highs, according to analysts at Bank of America.

It was up 0.7 percent at $2,674.56 an ounce, while December expiry was up 0.5 percent at $2,697.60 an ounce by 06:57 ET (1057 GMT).

Underpinning the surge was a jumbo 50-basis-point interest rate cut by the Federal Reserve last week, as well as bets that the central bank will roll out further cuts this year.

However, in a note to clients, Bank of America analysts said that while gold prices are well above their 200-day moving average, yields are historically “flat 1-6 months after trading at such extremes “.

“Gold investors are already discounting 150-200 (basis points) of interest rate cuts from our estimates. If Fed cuts are slower than expected, the pace of gold gains could also slow,” Bank of America analysts wrote.

“However, price support is clear.”

Investors are now focused on an upcoming address by Fed Chairman Jerome Powell on Thursday, while key US economic readings also loom.

Powell will deliver pre-recorded remarks at the US Treasury Market Conference in New York at 09:20, according to the Fed’s website.

Following last week’s huge rate cut, Powell said the move was part of a “recalibration” of policy aimed at protecting the US labor market while reducing inflation to the Fed’s stated 2% target.

Several other policymakers defended the big cut this week, including Fed Governor Adriana Kugler, who said Wednesday that the rate-setting Federal Open Market Committee must “balance its focus” between suppressing price pressures and avoiding “pain.” in the economy in general. .

But Fed officials were not unanimous in backing the size of the cut. Fed Governor Michelle Bowman, who voted to cut borrowing costs by a more traditional 25 basis points, said she remained concerned about lingering inflation risks.