• Gold price gains strong positive traction on Monday and spikes to a fresh all-time peak.
  • The cautious market mood, along with dovish Fed expectations, benefits the XAU/USD.
  • Overstretched conditions on the daily chart, reviving USD demand prompt profit-taking.

Gold price (XAU/USD) builds on its recent strong rally witnessed over the past three weeks or so and surges to a fresh record high, around the $2,144-2,145 region during the Asian session on Monday. The precious metal, however, surrendered a major part of its intraday gains and currently trades below the $2,100 mark, still up around 0.70% for the day.

A modest uptick in the US Treasury bond yields assists the US Dollar (USD) in attracting some buyers and forces bulls to take some profits off the table amid overbought conditions on the daily chart. That said, firming expectations that the Federal Reserve (Fed) is done raising interest rates and may begin easing its monetary policy by the first half of 2024 might continue to act as a tailwind for the non-yielding yellow metal.

Meanwhile, a further escalation of tensions in the Middle East and fears of another COVID-19-like respiratory illness outbreak in China temper investors’ appetite for riskier assets. This is evident from the prevalent cautious mood around the equity markets, which further contributes to limiting the downside for the safe-haven Gold price.

Traders might also refrain from placing fresh directional bets and prefer to wait for this week’s important US macro data, scheduled at the beginning of a new month. In the meantime, Monday’s release of the Factory Orders data from the US might influence the USD and provide some impetus to the XAU/USD later during the early North American session. Nevertheless, the fundamental backdrop warrants some caution for aggressive bearish traders.

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Daily Digest Market Movers: Gold price might continue to find support from a softer risk tone and dovish Fed hopes

From a technical perspective, the intraday pullback drags the precious metal below the 23.6% Fibonacci retracement level of the rally from the November monthly swing low, around the $1,932-$1,931 region. The Relative Strength Index (RSI) on the daily chart is flashing extremely overbought conditions and holding back bulls from placing fresh bets around the Gold price.

Any further pullback, however, is likely to find support near the $2,079-2,080 area, or the previous all-time peak touched in May, below which the XAU/USD could slide to the 38.2% Fibo. level, around the $2063-2,062 zone. On the flip side, move back above the $2,095-2,100 immediate hurdle might now confront some resistance near the $2,118 area. Some follow-through buying should allow the Gold price to retest the record high around the $2,144-$2,145 region, which if cleared will reinforce the near-term positive outlook and pave the way for additional gains.

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