Key Points:
- Gold hit a record high near $2,450 in Asian session on Monday.
- Renewed interest rate cut hopes and Middle East tensions drive demand for gold.
- Fed officials’ speeches later today may offer insights into future monetary policy.
Market Overview
Gold (XAU/USD) surged on Monday, hitting a record high near $2,450 during the Asian session. The rise is attributed to renewed expectations of interest rate cuts by the US Federal Reserve (Fed) and escalating geopolitical tensions in the Middle East. The ongoing conflict between Russia and Ukraine has further increased demand for safe-haven assets following significant attacks over the weekend.
Impact of Fed Speeches on Gold Price
Gold traders will turn their attention to speeches from Fed officials Bostic, Barr, Waller, Jefferson, and Mester later on Monday. These speeches may offer clues on future monetary policy. A cautious or hawkish stance from these officials could limit gold’s gains.
Currently, financial markets estimate a 10% chance of a rate cut in June and nearly 80% in September, according to the CME FedWatch tool.
Geopolitical Risks and Safe-Haven Demand
Geopolitical instability continues to support gold prices. Iranian state television reported no signs of life at the crash site of a helicopter carrying President Ebrahim Raisi, heightening tensions in the Middle East. This incident, along with the renewed conflict between Russia and Ukraine, has increased the demand for gold as a safe-haven asset.
Central Bank Actions and Gold Purchases
In April, the People’s Bank of China (PBoC) added 60,000 troy ounces of gold to its reserves, marking the 18th consecutive month of gold purchases. This demonstrates sustained central bank interest in gold as a stable asset. Richmond Fed President Thomas Barkin noted that while inflation is decreasing, reaching the Fed’s 2% target will take more time.
Cleveland Fed President Loretta Mester stated that the current monetary policy is appropriate as they continue to evaluate economic data. Fed Governor Michelle Bowman mentioned that although the policy is restrictive, she is open to rate hikes if inflation does not improve.
Gold Prices Forecast
Gold (XAU/USD) is currently trading at $2,437.660, up 0.98%. The 4-hour chart highlights the pivot point at $2,440.75, a crucial level for near-term price action. Immediate resistance is at $2,448.96, followed by $2,459.34 and $2,471.10. On the downside, immediate support lies at $2,425.87, with further support at $2,411.50 and $2,389.63.
The 50-day Exponential Moving Average (EMA) is positioned at $2,369.02, while the 200-day EMA stands at $2,318.33, indicating a continued bullish trend. However, the formation of a Doji candle below the $2,448 resistance level suggests a potential bearish correction. Gold could drop to the 23.6% or 38.2% Fibonacci retracement levels if this resistance holds.
In conclusion, gold is bearish below $2,440.75. A break above this level could reinforce a bullish bias, while staying below may lead to further declines.
