Gold price stands firm near record high; overbought RSI warrants caution for bulls

• Gold price attracts buyers for the fourth straight day amid worries about Trump's tariffs.
• Bets for more Fed rate cuts and inflation concerns further benefit the XAU/USD pair.
• Rebounding US bond yields and a modest USD uptick might cap gains for the commodity.

Gold price (XAU/USD) trades with a positive bias around the $2,820 region during the Asian session on Tuesday and remains close to the all-time peak touched the previous day. Investors remain concerned about the potential economic fallout from US President Donald Trump's trade tariffs, which is seen driving flows towards the safe-haven bullion for the fourth straight day. Furthermore, expectations that Trump's protectionist policies would result in higher US inflation further benefit the precious metal's status as a hedge against rising prices.

Apart from this, bets that the Federal Reserve (Fed) will lower borrowing costs twice by the end of this year suggest that the path of least resistance for the non-yielding Gold price remains to the upside. Meanwhile, Trump's decision to temporarily pause tariffs on Mexico and Canada, after striking a border security deal with both nations, boosts investors' confidence. This is evident from a generally positive tone around the equity markets. The risk-on flow pushes the US Treasury bond yields higher and might cap the upside for the precious metal. 

Gold price continues to attract haven flows on the back of trade war fears

• US President Donald Trump's tariff plans continue to fuel concerns about a global trade war and its impact on the economy, lifting the safe haven Gold price to a fresh all-time peak on Monday. 
• The Institute for Supply Management's (ISM) Manufacturing Purchasing Managers' Index climbed from 49.3 in the previous month to 50.9 in January, beating expectations for a reading of 49.8.
• Additionally, the Prices Paid Index--which measures inflation--rose to 54.9 from 52.5, while the Employment Index increased to 50.3 from 45.4, and the New Orders Index improved to 55.1.
• This comes on top of speculations that Trump's trade tariffs could push up inflation and give the Federal Reserve less impetus to cut interest rates further, which underpins the US Dollar. 
• The view was echoed by comments from Chicago Fed President Austan Goolsbee, who warned that uncertainty over Trump's policies could delay the central bank's plans to cut interest rates. 
• Separately, Atlanta Fed President Raphael Bostic noted on Monday that although the US labor market remains surprisingly resilient, tariff threats throw a wrench in outlook expectations.
• Trump's policies could push up inflation, which, along with expectations for further policy easing by the Federal Reserve, turn out to be another factor benefiting the non-yielding yellow metal.
• Trump temporarily paused tariffs on Mexico and Canada after striking a border security deal, which boosts investors' confidence and might cap any further move-up for the safe-haven XAU/USD.
• The US Dollar attracts some dip-buyers following the previous day's turnaround from the vicinity of over a two-year high and might hold back bulls from placing fresh bets around the commodity.
• Tuesday's US economic docket features the release of Job Openings and Labor Turnover Survey (JOLTS) and Factory Orders data, which might provide some impetus to the USD and the Gold price. 

Gold price needs to consolidate recent strong gains before the next leg up

From a technical perspective, the Relative Strength Index (RSI) is already flashing slightly overbought conditions on the daily chart. This makes it prudent to wait for some near-term consolidation or a modest pullback before the next leg up. That said, any corrective slide below the $2,800 immediate support might still be seen as a buying opportunity and remain limited near the $2,773-2,772 horizontal resistance breakpoint. Some follow-through selling, however, could pave the way for a further decline towards the $2,755 zone en route to the $2,725-2,720 region and the $2,700 mark.

On the flip side, bulls are likely to pause near the $2,830 area, or the record peak touched on Monday. Some follow-through buying, however, will set the stage for an extension of a well-established trend witnessed from the December swing low, around the $2,583 region.