Gold price sits near record high amid firming Fed rate cut bets, geopolitical risks

• Gold price stands tall near an all-time peak amid bets for a June Fed rate cut.
• The USD languishes near a month low and acts as a tailwind for the commodity.
• Geopolitical risks also benefit the safe-haven metal, though bulls seem reluctant.
• Overbought RSI on the daily chart warrants caution ahead of the NFP release on Friday.

Gold price (XAU/USD) built on its recent breakout momentum and touched a fresh all-time peak, around the $2,152 region on Wednesday amid expectations for an imminent shift in the Federal Reserve's (Fed) policy stance. The bets were reaffirmed by Fed Chair Jerome Powell's comments, saying that the central bank expects to reduce its benchmark interest rate later this year. Minneapolis Fed President Neel Kashkari, however, downplays speculations about more aggressive policy easing and assists the US Dollar (USD) to stall its recent decline to its lowest level since early February. This, in turn, keeps a lid on any further gains for the precious metal amid extremely overstretched conditions on the daily chart.

Meanwhile, any meaningful corrective decline in the Gold price seems elusive amid persistent geopolitical tensions. Apart from this, concerns about a slowdown in China – the world's second-largest economy – might continue to act as a tailwind for the safe-haven precious metal. Investors might also prefer to wait on the sidelines ahead of Powell's second day of testimony before the Senate Banking Committee and the release of the closely-watched US monthly employment details – popularly known as the Nonfarm Payrolls (NFP) report on Friday. In the meantime, traders on Thursday might take cues from the US Weekly Initial Jobless Claims data for short-term impetus later during the North American session.

Daily Digest Market Movers: Gold price remains well supported by Fed rate cut bets

• Bets that the Federal Reserve will start cutting interest rates in June, along with geopolitical risks and China's economic woes, lifted the non-yielding Gold price to a record high on Wednesday.
• Fed Chair Jerome Powell told US lawmakers on Wednesday that if the economy evolves broadly as expected, the central bank can be expected to cut its benchmark interest rates later this year.
• The current market pricing indicates a greater chance, around 70% for a June Fed rate cut, which dragged the yield on the 10-year US government bond to a one-month low on Wednesday.
• Minneapolis Fed President Neel Kashkari said that he had penciled in two rate cuts in 2024 and added that he may reduce the number of cuts amid the incoming stronger macro data.
• The uncertainty about the Fed's rate-cut path, meanwhile, keeps the US Dollar close to its lowest level since early February and should continue to act as a tailwind for the precious metal.
• Three crew members were killed in a Houthi missile strike on a cargo ship off southern Yemen, marking the first fatalities since the Iran-backed group's attacks on vessels in the Red Sea.
• This raises the risk of a further escalation of military actions in the Middle East and supports prospects for an extension of the well-established short-term uptrend for the safe-haven commodity.
• Traders now look to the release of the US Weekly Initial Jobless Claims data and Fed Chair Jerome Powell's second day of testimony for some impetus ahead of the US NFP report on Friday.

Technical Analysis: Gold price needs to consolidate amid overbought RSI before the next leg up

From a technical perspective, the recent breakout through the $2,064-2,062 strong horizontal barrier and a subsequent strength beyond the $2,100 mark was seen as a key trigger for bullish traders. That said, the Relative Strength Index (RSI) on the daily chart is already flashing extremely overbought conditions. This makes it prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of the well-established short-term uptrend. Nevertheless, the Gold price seems poised to climb further towards the $2,200 psychological mark.

On the flip side, corrective declines might now be seen as a buying opportunity and remain limited near the $2,100 round figure. The said handle should act as a pivotal point, which if broken decisively could drag the Gold price back towards the $2,064-2,062 resistance-turned-support. Some follow-through selling will suggest that the XAU/USD has formed a near-term top and possibly shift the bias in favour of bearish traders.