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Gold Price Jumps to Record High Amid Rising Geopolitical Tensions

The price of gold reached a record high on Monday, driven by hopes of Federal Reserve rate cuts and escalating geopolitical tensions in the Middle East. The yellow metal surged near $2,450 during the European session, with renewed anticipation of US Federal Reserve (Fed) interest rate cuts and increased conflict in the Middle East bolstering demand for safe-haven assets. Additionally, intensified hostilities between Russia and Ukraine over the weekend have further fueled this trend.

Gold traders will closely watch speeches from Federal Reserve officials Bostic, Barr, Waller, Jefferson, and Mester later on Monday, seeking clues on the future direction of monetary policy. Hawkish remarks or a cautious approach from Fed officials could temper gold's upward momentum.

Daily Digest Market Movers: Gold Price Rises Amid Geopolitical Risks

Iranian state television reported that there is “no sign of life” at the crash site of the helicopter carrying Iran's President Ebrahim Raisi, according to Reuters. Richmond Fed President Thomas Barkin noted that while inflation is easing, achieving the Fed’s 2% target will take more time. Cleveland Fed President Loretta Mester stated that the current monetary policy stance is appropriate, as the Fed continues to evaluate incoming economic data. Fed Governor Michelle Bowman mentioned that the policy remains restrictive but expressed willingness to hike rates if inflation stalls or reverses.

Financial markets have priced in a 10% probability of a rate cut in June and an almost 80% chance of a cut in September, according to the CME FedWatch tool. Meanwhile, the People's Bank of China (PBoC) added 60,000 troy ounces of gold to its reserves in April, marking the 18th consecutive month of gold purchases, according to official data released Tuesday.

Technical Analysis: Gold Price Maintains Bullish Momentum, Overbought RSI in Focus

Gold continues to trade with a positive bias, breaking above an ascending trend channel formed since May 2. Technically, the bullish outlook remains intact on the four-hour chart, as the price is above the 100-period Exponential Moving Average (EMA) and the Relative Strength Index (RSI) is around 82.50, indicating overbought conditions. This suggests the possibility of consolidation before any further near-term upside.

An all-time high of $2,440 serves as immediate resistance for XAU/USD. A decisive break above this level could lead to a rally towards the $2,500 psychological barrier. Conversely, the former resistance-turned-support level at $2,415 is the first downside target. The critical support level is at $2,400, followed by the May 16 low of $2,370.

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