Gold prices surged last week, breaking through the $2,200 mark and surpassing the previous record high around $2,223, indicating a bullish trend for investors. However, caution is advised as the Relative Strength Index (RSI) suggests overbought conditions, prompting experts to anticipate a period of consolidation or a slight pullback before further gains.
Despite this, gold prices are expected to continue their upward trajectory, potentially reaching the $2,300 milestone. Any downward movement is likely to attract buyers near the $2,223 mark, acting as a crucial support level. However, a significant break below this point could trigger technical selling, leading to a downward trend.
During the early European session, gold prices consolidated around $2,260-$2,265, touching a fresh record high on Monday. Investor sentiment is buoyed by expectations of rate cuts by the Federal Reserve in June, supported by recent data such as the US Personal Consumption Expenditures (PCE) Price Index. Geopolitical tensions, including the ongoing Russia-Ukraine conflict and conflicts in the Middle East, are also bolstering the demand for gold as a safe-haven asset.
Additionally, positive manufacturing data from China, indicating expansion for the first time in six months, is boosting investor confidence and supporting a risk-on environment. Despite some US Dollar buying, which may limit gains for gold, the overall fundamental backdrop suggests a bullish outlook for the XAU/USD pair.
Source: https://www.fxstreet.com/