Article by: ETO Markets

Gold prices (XAU/USD) climbed to a record high on the back of increased expectations of a Federal Reserve rate cut in September. This expectation has been further supported by recent dovish comments from Fed officials, raising confidence that the Fed will begin its rate-cutting cycle in September. Those expectations have kept Treasury yields subdued, limiting the dollar's gains and continuing to provide support for non-yielding gold. In addition, despite the positive US retail sales data, indicating the resilience of the consumer, the overall risk appetite sentiment and the upward trend of global equities have also formed a certain restraining effect on the safe-haven demand for gold. However, expectations of future Fed rate cuts and uncertainty in the global economy continue to support gold prices, and any meaningful corrective decline in the near term appears to remain elusive.

From a technical point of view, gold has seen some profit taking following its record high in the $…-… area, but the overall bullish potential remains intact. The Relative Strength Index (RSI) on the daily chart is slightly overbought, suggesting caution before continuing to be bullish. Currently, the support level near $… is strong, and a break below this level could trigger a technical sell-off that would drag gold to the $…-… area, with further downside likely to test the $… mark and support at $…. However, as long as gold prices remain above these key support levels, the overall bullish trend should continue, and the target could retest the psychological $… level.