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For eight consecutive days, the price of gold has been gaining strong positive momentum.
Expectations that the Federal Reserve will begin to lower interest rates in June are keeping bulls on the U.S. dollar on the defensive and are a key factor directing flows towards the non-yielding yellow metal. Additionally, ongoing geopolitical tensions and economic problems in China provide support to this safe-haven asset.
Meanwhile, Minneapolis Fed President Neel Kashkari played down rumors of a more aggressive policy easing. This, in turn, prompted a modest rebound in U.S. Treasury yields and helped limit the potential decline of the dollar.
However, tense conditions on the daily chart are currently preventing traders from entering new bullish positions ahead of the NFP report, which will be released today during the American session.
From a technical perspective, the recent breakthrough above the $2,100 mark is considered a key trigger for the bulls. Nevertheless, the Relative Strength Index (RSI) on the daily chart already indicates overbought conditions. Therefore, before preparing for the continuation of the established short-term upward trend, it would be prudent to wait for some short-term consolidation or a moderate pullback.
Nevertheless, gold seems poised for further growth towards the psychological $2,200 mark.
On the flip side, corrective declines can be viewed as an opportunity to buy, with a limited figure around $2,100. This mark is a turning point that, in the case of a decisive breakthrough, could push the price of gold back to the $2,065 level.
Some subsequent sales may imply that the XAU/USD pair might shift the balance in favor of bears.
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