Gold price trades near its highest level since May on the back of geopolitical risks

• Gold price consolidates its recent strong gains and manages to hold above the $2,000 mark.
• Geopolitical tensions in the Middle East continue to lend support to the safe-haven metal.
• A slightly overbought RSI warrants caution for bulls ahead of this week’s key event/data risks.

Gold price (XAU/USD) advanced beyond the $2,000 psychological mark on Friday, hitting its highest level since May 16 and registering a third straight weekly gain. An escalation in the Israel-Hamas conflict continues to fuel safe-haven buying and acts as a tailwind for the precious metal. Traders, however, refrain from placing fresh bullish bets and prefer to wait on the sidelines ahead of this week's key central bank event risks. The Bank of Japan (BoJ) is scheduled to announce its policy decision on Tuesday, which will be followed by the crucial monetary policy update by the Federal Reserve (Fed) on Wednesday and the Bank of England (BoE) meeting on Thursday.

Investors this week will also look to the official PMIs from China for cues about business activity in the world's second-largest economy. Apart from this, the prelim EuroZone GDP and CPI, along with the US monthly jobs report (NFP), should provide some meaningful impetus to the Gold price. In the meantime, the prospects for further policy tightening by the Fed continue to underpin the US Dollar (USD) and keep the XAU/USD bulls on the defensive through the Asian session on Monday. The lack of any follow-through selling, however, warrants some caution for aggressive bearish traders and before positioning for any meaningful corrective decline for the commodity.

Daily Digest Market Movers: Gold price hovers about $2,000 as the Israel-Hamas conflict continues to drive haven flows

• Gold price manages to hold above the $2,000 psychological mark on Monday and continues to draw support from the increasing risk of an escalation of geopolitical tensions in the Middle East.
• Palestinians in northern Gaza reported fierce air and artillery strikes early on Monday as Israeli troops, backed by tanks, pressed into the besieged enclave with a ground assault.
• The US Commerce Department reported on Friday that consumer spending increased more than expected in September and that monthly inflation accelerated during the reported month.
• This comes on top of the upbeat Advance US GDP report, which showed that the world's largest economy grew at its fastest pace in nearly two years in the third quarter.
• The US economic resilience should allow the Federal Reserve (Fed) to stick to its hawkish stance and keep hopes alive for one more interest rate hike by the year-end.
• The hawkish outlook remains supportive of elevated US Treasury bond yields and continues to underpin the US Dollar, acting as a headwind for the precious metal.
• Traders now look to the outcome of a crucial two-day FOMC monetary policy meeting for clues about the future rate-hike path before placing fresh directional bets.
• The Bank of Japan and the Bank of England are also scheduled to announce their respective policy decisions and infuse some volatility in the global financial markets.
• Investors this week will further take cues from the official Chinese PMIs, the flash EuroZone CPI and GDP print and the closely-watched US jobs report (NFP).

Technical Analysis: Gold price might consolidate its recent strong gains amid a slightly overbought RSI

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is already flashing slightly overbought conditions and holding back bulls from placing fresh bets around the Gold price. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for an extension of a multi-week-old uptrend. That said, any meaningful corrective decline is likely to find decent support near the $1,986-1,985 horizontal resistance breakpoint.

The said areas should act as a pivotal point, below which the Gold price could accelerate the fall towards the $1,972 support zone. On the flip side, some follow-through buying beyond the $2,005 area, or the multi-month peak touched on Friday, will set the stage for a move towards the next relevant hurdle near the $2,022 area.