Gold continued to make strides to record new highs earlier this week as prices neared around $2,440 yesterday.
Gold investors are becoming more optimistic and expect the price of gold to strengthen again this week and even have the potential to break the record of the highest price of all time recorded last May.
This was driven by a change in the tone of the speech delivered by Federal Reserve (Fed) Chairman Jerome Powell who was more dovish at midnight yesterday.
Powell stated that the central bank does not need to wait until inflation reaches its 2% target to start cutting interest rates.
This situation has increased the tendency of market expectations that the Fed is getting closer to lowering rates in the near term.
The effect will put pressure on the US dollar which will shrink and support the price of gold to rise higher.
On the XAU/USD chart that measures the value of gold against the US dollar, it can be seen that the price made a higher increase yesterday until it broke through the level of 2430.00.
The 2440.00 level was seen as price-tested resistance and price re-tested it again in early European session trading this evening.
Price movement remains bullish above the Moving Average 50 (MA50) support line on the 1-hour time frame on the XAU/USD chart since last week.
Higher increases will be expected to continue for gold prices to maintain the positive momentum.
The level of 2450.00 will be the target to be reached where the level became the highest record price of gold in history reached in mid-May last before retreating to the level of 2300.00.
In anticipation of a further decline in price, a lower drop below the MA50 support line will trigger a trend reversal signal for gold.
The extended decline will focus on some important previous levels such as 2390.00 and 2350.00 to assess the surrounding price reaction.
