Breaking: Gold at All-Time High!

• Gold price continues to scale new record highs amid persistent geopolitical tensions.
• The decisive move seems unaffected by reduced Fed rate cut bets and bullish USD.
• Extremely overbought conditions might prompt some profit-taking around the metal.

Gold price (XAU/USD) builds on its recent breakout momentum and climbs to the $2,400 neighbourhood or a fresh all-time high during the early European session on Friday. Geopolitical tensions in the Middle East show little signs of abating, which, in turn, is seen as a critical factor benefiting the safe-haven precious metal. Expectations that major central banks will cut interest rates this year lend additional support to the non-yielding yellow metal. 

Bulls, meanwhile, seem relatively unaffected by strong follow-through US Dollar (USD) buying, bolstered by expectations that the Federal Reserve (Fed) could keep interest rates higher for longer, which tends to undermine the non-yielding Gold price. Even a generally upbeat tone around the equity markets does little to hinder the positive move, suggesting that the path of least resistance for the XAU/USD is to the upside, though overbought conditions might cap gains.

Daily Digest Market Movers

Gold price remains supported by Middle East tensions, bulls shrug off stronger USD

• Heightened tensions in the Middle East, amid a possible Iranian retaliation over a suspected Israeli strike on its embassy in Syria, lifted the safe-haven Gold price to a fresh all-time high on Friday.
• The cooler-than-expected US Producer Price Index released on Thursday keeps alive hopes for an imminent interest rate cut by the Federal Reserve and provides an additional boost to the XAU/USD 
• According to the CME Group’s FedWatch tool, traders see a greater chance that the Fed will not start its rate-cutting cycle before the September policy meeting and fewer than two rate cuts this year. 
• New York Fed President John Williams noted that inflation setbacks are not a surprise and that the central bank does not need to change policy in the near term, though eventually will need to cut rates.
• Richmond Fed President Thomas Barkin said that the central bank still needs to be where it wants to be on inflation, and this week’s CPI report did not increase his confidence that disinflation is spreading.
• The hawkish outlook keeps the US Treasury bond yields elevated, which allows the US Dollar to stand tall near the YTD top, albeit does little to dent the bullish sentiment surrounding the XAU/USD.

Technical Analysis

Gold price needs to consolidate or retreat a bit before the next leg up amid overbought RSI

From a technical perspective, the strong positive momentum in the gold market remains uninterrupted despite the extremely overbought Relative Strength Index (RSI) on the daily chart. Bulls, however, might take some profits near the $2,400 mark heading into the weekend, warranting some caution before positioning for any further appreciating move. As suggested by technical analysis, this potential for consolidation or retreat is a critical factor that investors and financial professionals should be prepared for. Any meaningful corrective slide below the Asian session low, around the $2,370 area, however, will likely find decent support near the $2,352-2,350 region. Some follow-through selling could expose the next relevant support near the $2,332 area before the Gold price eventually drops to the $2,300 neighbourhood or the weekly low.