The price of Gold exceeds the $2,400 level, aiming for all-time highs

• Gold breaks above $2,400, approaching its all-time high of $2,431.
• Lower US April inflation supports Gold's rally, despite rising Treasury yields.
• Fed officials remain cautious, with rate cut expectations in December 2024 slightly adjusted to 35 basis points.

Gold price soared during the pre-weekend North American session as the XAU/USD pair traded above $2,400, posting gains of over 1.5% amid rising Treasury yields US. The non-performing metal extended its advance and threatened to break the all-time high of $2,431.

The decline in inflation in April in the United States led to the rise of Gold above $2,400, although Treasury bond yields rose. The US dollar (DXY) fell 0.03% and stood at 104.45 points.

This reignited speculation that the Federal Reserve (Fed) could lower rates in 2024. However, Fed officials stressed that a positive inflation reading is not enough, and most regional Fed chairs maintain a cautious stance.

According to the December 2024 federal funds rate futures contract, expectations that the Fed would cut rates fell from 36 basis points (bps) to 35 bps by the end of the year.

Daily Market Moves Summary: Gold Price Ignores Fed's Dovish Comments, Keeps Rates Higher

• Gold prices rose despite rising US Treasury yields and weak US Dollar. The 10-year US Treasury bond yield is trading at 4.42% and is up four and a half basis points (bps) from its opening level. The DXY fell 0.04% to 104.40.
• On Wednesday, US inflation resumed its downward trend after six months of stagnation, according to the Bureau of Labor Statistics (BLS). The core Consumer Price Index (CPI) fell from 3.8% to 3.6% annually in April, easing pressure on the Fed. This data and weak retail sales raised expectations of a rate cut by the Fed.
• After these data were known, US stocks reached new all-time highs, while the Dollar fell sharply, following the path of US Treasury yields.
• Richmond Fed President Thomas Barkin acknowledged that inflation is declining, but stressed that “it will take longer” to reach the Fed's goal.
• Cleveland Fed President Loretta Mester gave the thumbs up to the latest CPI data and noted that the Fed's current monetary policy stance is appropriate as it continues to evaluate upcoming economic data.
• Fed Governor Michelle Bowman said policy is restrictive but she is willing to raise rates if inflation stagnates or reverses.

Technical analysis: The price of Gold will extend its rally towards $2,500

The upward trend in the price of Gold remains intact, as the gold metal resumed its upward trend. Gold buyers gain strength with momentum on their side as the Relative Strength Index (RSI) remains in bullish territory.

Therefore, XAU/USD will most likely test the all-time high of $2,431. Once passed, the next stop would be the $2,450 mark, followed by the psychological figure of $2,500.

Conversely, if XAU/USD pulls back below $2,400, it could expose the May 13 low at $2,332, followed by the May 8 low at $2,303. Once these levels are broken, the 50-day SMA at $2,284 will be the next target.