The price of gold (XAU/USD) has maintained a robust upward trajectory for the seventh consecutive day, reaching near-record highs during the early European session on Thursday. The driving force behind this extended rally is the growing consensus that the Federal Reserve (Fed) is poised to initiate interest rate cuts starting in June. This perception has placed USD bulls on the defensive, prompting a surge in demand for the non-yielding precious metal.
A confluence of factors contributes to gold’s resilience, including a softer tone in the overall market, persistent geopolitical tensions, and economic challenges faced by China. These conditions collectively bolster the appeal of gold as a safe-haven asset.
However, Minneapolis Fed President Neel Kashkari attempted to dispel speculations of a more aggressive policy easing, leading to a minor rebound in US Treasury bond yields. This rebound, in turn, provides some support to the US Dollar, mitigating the downside for the precious metal.
Despite the recent gains, traders may exhibit caution due to extremely overstretched conditions observed on the daily chart. This cautious sentiment could deter fresh bullish bets on gold.
Investors are closely monitoring developments, with attention turning to Federal Reserve Chair Jerome Powell’s second day of testimony. Additionally, the release of the US Weekly Initial Jobless Claims data is anticipated to provide further market impetus ahead of the eagerly awaited Non-Farm Payrolls (NFP) report scheduled for Friday. The intricate interplay between monetary policy expectations, economic indicators, and geopolitical events is likely to influence gold’s trajectory in the near term.
