Gold price (XAU/USD) maintains its position above the crucial $2,400 mark in Tuesday’s European session, supported by a slight pullback in the US Dollar and Treasury yields. Investors remain cautious, seeking further clarity on the potential for a US recession and the extent of Federal Reserve (Fed) interest rate cuts.

Market Drivers:

• Middle East Tensions: Escalating tensions in the Middle East following recent events have increased gold’s appeal as a safe-haven asset, contributing to its price stability.
• Fed Rate Cut Expectations: Persistent expectations of substantial rate cuts by the Fed this year, driven by fears of a US economic slowdown, are also supporting gold prices.
• US Economic Outlook: While recent data has raised concerns about a potential recession, the faster-than-expected expansion in the US ISM Services PMI has provided some relief to the market.
• Dovish Fed Commentary: Chicago Fed President Austan Goolsbee’s remarks on the potential for rate cuts in response to economic weakness have further reinforced expectations of a dovish Fed policy.

Technical Analysis:

Gold price continues to trade within a slightly rising channel on a daily timeframe, with the 50-day Exponential Moving Average (EMA) acting as a strong support level. The 14-day Relative Strength Index (RSI) remains in the neutral range, indicating a lack of clear direction in the market.

A break above the all-time high of $2,483.75 could trigger further upside momentum for gold prices. On the downside, the upward-sloping trendline at $2,225 remains a key support level.