Gold price stands tall near record high, overbought RSI warrants caution for bulls

• Gold price is underpinned by dovish Fed expectations and geopolitical tensions.
  

• The upbeat market mood does little to dent the underlying strong bullish tone.

• Traders await speeches by Fed officials and the US PCE data for a fresh impetus. 
  

Gold price (XAU/USD) rallied to the $2,664-2,665 region on Tuesday, hitting yet another record high amid rising bets for a more aggressive policy easing by the Federal Reserve (Fed) and escalating geopolitical tensions in the Middle East. Meanwhile, dovish Fed expectations, along with Tuesday's disappointing US macro data, keep the US Dollar (USD) depressed near the YTD low set last week. This, to a larger extent, overshadows the latest optimism led by China's new stimulus measures and acts as a tailwind for the non-yielding yellow metal. 

Bulls, however, take a breather during the Asian session on Wednesday amid slightly overbought conditions on the daily chart. Furthermore, investors seem reluctant to place aggressive bets as more Fed officials are set to speak this week, including the Fed Chair Jerome Powell on Thursday. Also this week, the focus will be on the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday, which might influence expectations about the Fed's rate-cut path and determine the next leg of a directional move for the Gold price. 

Daily Digest Market Movers: Gold price holds ground near all-time peak amid bets for another 50 bps rate cut by the Fed

According to the CME Group's FedWatch Tool, the markets are currently pricing in over a 75% chance that the Federal Reserve will cut interest rates by another 50 basis points in November. 

Adding to this, Tuesday's weaker US macro data weighed heavily on the US Dollar and dragged it back closer to the YTD low, lifting the non-yielding Gold price to a fresh all-time peak. 

The Conference Board's (CB) Consumer Confidence Index deteriorated in September and dropped to 98.7, from August's 105.6, while the Present Situation Index fell to 124.3 from 134.6. 

A survey from the Richmond Fed indicated that manufacturing activity remained sluggish and the composite manufacturing index declined to -21 in September from the previous -19. 

Israeli airstrikes in southern and eastern Lebanon on Monday, which killed over 500 people, raised the risk of a broader war in the Middle East and further boosted the safe-haven XAU/USD. 

The latest optimism led by China's new stimulus measures remains supportive of the risk-on rally, albeit does little to dent the strong bullish sentiment surrounding the precious metal. 

Speeches by Fed officials this week, including the Fed Chair Jerome Powell on Thursday, will be looked at for cues about the rate-cut path and provide a fresh impetus to the commodity.

The focus, meanwhile, will remain glued to the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday, which will drive the USD demand in the near term.

Technical Outlook: Gold price needs to consolidate before the next leg up, ascending channel acceleration in play

From a technical perspective, this week’s breakout through a short-term ascending channel and the subsequent move up supports prospects for additional gains. That said, the Relative Strength Index (RSI) on the daily chart has moved above the 70 mark, suggesting slightly overbought conditions. This, in turn, makes it prudent to wait for some near-term consolidating or a modest pullback before placing fresh bullish bets around the Gold price. 

In the meantime, any corrective slide is more likely to attract some dip-buying and find decent support near the ascending channel resistance breakpoint, around the $2,625 region. This is followed by the $2,600 round figure, which if broken decisively might prompt some technical selling and drag the Gold price towards the $2,575 region en route to the $2,560 area and the $2,535-2,530 resistance-turned-support.