21.10.202413:17 Forex Analysis & Reviews: XAU/USD. Analysis and Forecast

Today, gold continues its upward movement, reaching a new record high.

The easing of monetary policy and ongoing geopolitical risks stemming from Middle East conflicts have been highly supportive of gold. Additionally, political uncertainty in the United States is seen as another factor contributing to the recent rise of the yellow metal.

However, alongside these factors, expectations of continued gradual easing by the Federal Reserve support the elevated yields of U.S. Treasury bonds. This, in turn, helps the U.S. dollar attract some buyers at the start of the new week.

In fact, the U.S. Dollar Index, which tracks the dollar's performance against a basket of currencies, is moving back toward its highest level seen in August and was again reached last week.

With gold showing mildly overbought conditions on the daily chart, the current strength of the dollar may attempt to limit further growth of the precious metal.

Technical Analysis

The strong performance last week and a close above the key $2700 level can be seen as a new catalyst for the bulls. Notably, the Relative Strength Index (RSI) on the daily chart has exceeded the 70 mark, indicating mildly overbought conditions. Therefore, it would be prudent to wait for a short-term consolidation or a moderate pullback before expecting a continuation of the recent upward trend.

The key psychological level of $2700 now serves as immediate support against any downturn, below which the price could accelerate a correction towards the $2662 zone. The next relevant support is in the $2646 level. A decisive break below this level could prompt further selling, exposing the psychological level of $2600 with an intermediate barrier near $2630.

Nonetheless, the bulls remain persistent, and the breakout above $2700 is still valid.