Gold prices hit a fresh record high around $2,570 early Friday as it extends the previous day’s upside break of a three-week-old resistance, now support around $2,525. This rise is fueled by increasing expectations of significant rate cuts from the US Federal Reserve and a push against a rising trend line from mid-July.
Despite the Fed's rate cut hopes supporting gold, an eight-week resistance line and an overbought RSI (Relative Strength Index) suggest a possible price pullback. Additionally, a potential bounce in the US Dollar, especially with upcoming reports on consumer sentiment and inflation expectations, might give gold buyers a temporary pause. Nevertheless, the breakout above resistance and bullish MACD signals keep the buyers optimistic.
To continue climbing, gold prices need to break above a two-month resistance line around $2,570. If successful, gold could quickly reach the 61.8% Fibonacci Extension (FE) level of the bullion’s late July to early September moves near $2,581 and then target $2,600. If gold surpasses $2,600, it could aim for the 78.6% and 100% FE levels around $2,610 and $2,650, respectively.
If prices pull back, they might first test the 50% and 38.2% FE levels near $2,560 and $2,540. A key support level at $2,525 could also come into play. If gold drops below $2,525, it might struggle to hold above $2,500 and $2,470, making those levels significant for potential declines.
Gold buyers are expected to remain strong, thanks to anticipated rate cuts from major central banks like the Fed. However, there might be a temporary dip in prices before the next rally.
