Gold prices ticks lower on Fed rate cut uncertainty, geopolitics and softer USD lend support

Gold price fails to build on overnight positive move amid hawkish Fed expectations.
A modest downtick in the US bond yields undermines the USD and lends some support.
Geopolitical risks and China’s economic woes also contribute to limiting the downside.

Gold price (XAU/USD) struggles to capitalize on the previous day’s positive move and trades with a mild negative bias heading into the European session on Wednesday. The incoming stronger US macro data, along with the recent hawkish remarks by several FOMC members, including the Federal Reserve (Fed) Chair Jerome Powell, forced investors to further scale back their expectations for early and steep rate cuts in 2024. This assists the US Dollar (USD) in stalling the overnight retracement slide from its highest level in almost three months and acts as a headwind for the non-yielding yellow metal.

That said, the risk of a further escalation of military action in the Middle East, along with persistent worries about slowing economic growth in China, lends some support to the safe-haven Gold price. Furthermore, traders now seem reluctant to place aggressive directional bets and prefer to wait for more cues about the likely timing of the first interest rate cut by the Fed, which will influence the precious metal. Hence, the focus will remain glued to next week’s release of the latest US consumer inflation figures. In the meantime, traders on Wednesday might take cues from speeches by Fed officials.

Daily Digest Market Movers: Gold price remains depressed amid reduced Fed rate cut bets

Investors continue to scale back their expectations for early and steep interest rate cuts by the Federal Reserve, which fails to assist the Gold price to build on the previous day’s modest gains.
The incoming stronger US macro data, influencing Friday’s blockbuster NFP report, suggested that the economy is in good shape, giving the Fed the headroom to keep rates higher for longer.
Furthermore, the recent hawkish remarks by influential FOMC members, including Fed Chair Jerome Powell, squashed market expectations for more aggressive policy easing in 2024.
Fed Chair Jerome Powell, in an interview with US TV show 60 Minutes aired on Sunday, reiterated that the March meeting is likely too soon to have confidence to start cutting interest rates.
Philadelphia Fed President Patrick Harker said on Tuesday that inflation must be moving sustainably lower to open the door to rate cutsr and that it would be a mistake to cut interest rates prematurely.
Harker added that the recent news on inflation has been encouraging, though wage gains are still too high for getting to the 2% target and it is possible that inflation may be more persistent than expected.
Separately, Minneapolis Fed President Neel Kashkari said that we are not done yet on inflation and most of the disinflationary gains have come from the supply side, but the data is looking positive.
The yield on the benchmark 10-year US government bond slides back closer to 4.0% and undermines the US Dollar, lending support to the XAU/USD amid persistent geopolitical risks.
The US continues its campaign against Houthi rebels in Yemen and intends to launch further strikes at Iran-backed groups, raising the risk of a further escalation of tensions in the Middle East.
Traders now look to the US Trade Balance data and Fed speeches for short-term opportunities, though the focus remains glued to the release of the latest US consumer inflation figures next week.

Technical Analysis: Gold price struggles to lure buyers, oscillates in a range around 50-day SMA

From a technical perspective, the overnight swing low, around the $2,023 area, now seems to protect the immediate downside ahead of the weekly trough, around the $2,015 region. Some follow-through selling below the $2,012-2,010 area might expose the $2,000 psychological mark. A convincing break below the latter could drag the Gold price towards the 100-day Simple Moving Average (SMA), currently around the $1,985 zone, en route to the 200-day SMA, near the $1,966-1,965 region.

On the flip side, any meaningful positive move is likely to confront stiff resistance near the $2,054-2,055 zone. This is followed by the $2,065 hurdle or last week’s swing high. Given that oscillators on the daily chart are holding in the positive territory, a sustained strength beyond has the potential to lift the Gold price towards the $2,078-2,079 area, or the YTD peak set in January. The subsequent move-up should allow the XAU/USD to reclaim the $2,100 mark and climb further to the next relevant hurdle near the $2,020 region.

Gold price fails to build on overnight positive move amid hawkish Fed expectations.
A modest downtick in the US bond yields undermines the USD and lends some support.
Geopolitical risks and China’s economic woes also contribute to limiting the downside.

Daily Digest Market Movers: Gold price remains depressed amid reduced Fed rate cut bets

Investors continue to scale back their expectations for early and steep interest rate cuts by the Federal Reserve, which fails to assist the Gold price to build on the previous day’s modest gains.
The incoming stronger US macro data, influencing Friday’s blockbuster NFP report, suggested that the economy is in good shape, giving the Fed the headroom to keep rates higher for longer.
Furthermore, the recent hawkish remarks by influential FOMC members, including Fed Chair Jerome Powell, squashed market expectations for more aggressive policy easing in 2024.
Fed Chair Jerome Powell, in an interview with US TV show 60 Minutes aired on Sunday, reiterated that the March meeting is likely too soon to have confidence to start cutting interest rates.
Philadelphia Fed President Patrick Harker said on Tuesday that inflation must be moving sustainably lower to open the door to rate cutsr and that it would be a mistake to cut interest rates prematurely.
Harker added that the recent news on inflation has been encouraging, though wage gains are still too high for getting to the 2% target and it is possible that inflation may be more persistent than expected.
Separately, Minneapolis Fed President Neel Kashkari said that we are not done yet on inflation and most of the disinflationary gains have come from the supply side, but the data is looking positive.
The yield on the benchmark 10-year US government bond slides back closer to 4.0% and undermines the US Dollar, lending support to the XAU/USD amid persistent geopolitical risks.
The US continues its campaign against Houthi rebels in Yemen and intends to launch further strikes at Iran-backed groups, raising the risk of a further escalation of tensions in the Middle East.
Traders now look to the US Trade Balance data and Fed speeches for short-term opportunities, though the focus remains glued to the release of the latest US consumer inflation figures next week.

Technical Analysis: Gold price struggles to lure buyers, oscillates in a range around 50-day SMA

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