The price of gold continues its steady upward trend and sets a new record due to rate decrease speculations.

1.On Thursday, the price of gold surges to a record high as speculation about a June Fed rate decrease grows.

2. The USD continues to support the XAU/USD as it hovers around a month low.

3. Even with an overbought RSI, the safe-haven commodity benefits from a reduced risk tone.

Thursday sees the gold price (XAU/USD) continue its upward trajectory for the seventh day in a row and reach a new all-time high, about $2,161 before the European session begins. In his semi-annual congressional hearing on Wednesday, Federal Reserve (Fed) Chair Jerome Powell reaffirmed the assumption that interest rates will soon be cut later this year. This turns out to be a major element driving the non-yielding yellow metal higher and keeping the US Dollar (USD) on the defensive near its lowest level since early February. 

In addition, a generally more relaxed tone, geopolitical tensions resulting from Middle East conflicts, and worries about a slowdown in China appear to be adding to the safe-haven value of gold. Neel Kashkari, the president of the Minneapolis Fed, batted down rumors of further aggressive policy easing in the meantime. In the midst of severely overbought conditions on the daily chart, this, together with a slight rebound in US Treasury bond yields, helps restrict any substantial fall for the Greenback and caps gains for the precious metal.

Daily Digest Market Movers: Fed rate decrease bets and a lower risk tone continue to support the price of gold.

The non-yielding price of gold reached a new high on Wednesday due to geopolitical threats, China's economic difficulties, and bets that the Federal Reserve would begin lowering interest rates in June.

Fed Chair Jerome Powell informed US legislators on Wednesday that the central bank will likely lower its benchmark interest rates later this year if the economy develops broadly as anticipated.

The yield on the 10-year US government bond fell to a one-month low on Wednesday, as the current market pricing suggests a higher likelihood of a June Fed rate decrease of about 70%.

Neel Kashkari, the president of the Minneapolis Fed, stated that he had scheduled two rate cuts for 2024 and added that he might drop them down in light of the upcoming stronger macrodata.

Meanwhile, the US Dollar is near its lowest level since early February due to the uncertainty surrounding the Fed's rate-cutting trajectory, which should continue to support the price of gold.

The Houthi missile attack on a cargo ship off the coast of southern Yemen claimed the lives of three crew members, the first casualties since the Iran-backed group began attacking ships in the Red Sea.

This increases the likelihood that military operations in the Middle East will intensify further and enhances the likelihood that the commodity known as a safe haven will continue its well-established short-term upward trend.

In order to gain some momentum before Friday's US NFP report, traders are now focusing on the release of the US Weekly Initial Jobless Claims data and Fed Chair Jerome Powell's second day of testimony.

Technical Analysis: Despite the daily chart's very overbought RSI, gold price bulls aren't ready to give up.

Technically speaking, traders were bullish after the market broke through the strong horizontal barrier between $2,064 and $2,062, and then continued to rise beyond $2,100. Having said that, the daily chart's Relative Strength Index (RSI) is already indicating very overbought conditions. Therefore, it would be wise to hold off on positioning for an extension of the well-established short-term uptrend until after some short-term consolidation or a slight decline. However, it appears that the price of gold is about to rise even higher, perhaps reaching the psychological $2,200 level.

Conversely, correctional dips might now be viewed as a chance to purchase and be constrained around the $2,100 round number. If the aforementioned handle is clearly broken, it should serve as a turning point that might push the price of gold back into the resistance-turned-support zone between $2,064 and $2,062. If there is some follow-through selling, it might indicate that the XAU/USD has formed a near-term peak and tip the scales in favor of traders who are pessimistic.