Gold price keeps the red below all-time peak ahead of US data, Fed’s Powell

Gold price edges lower amid some profit-taking ahead of Fed Chair Powell’s statement.
Bets for a June Fed rate cut undermine the USD and lend support to the XAU/USD.
Geopolitical risks and China’s economic woes also limit losses for the safe-haven metal.

Gold price (XAU/USD) trades with a mild negative bias during the early part of the European session on Wednesday, albeit lacks follow-through remains well within the striking distance of the all-time peak. Traders opt to lighten their bullish bets after the recent rally witnessed over the past week or so and ahead of the Federal Reserve (Fed) Chair Jerome Powell’s congressional testimony. Powell’s remarks will be scrutinized closely for cues about the Fed’s rate-cut path, which will influence the USD price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.

Traders on Wednesday will also confront the release of the US ADP report on private-sector employment and JOLTS Job Openings data, due later during the early North American session. In the meantime, growing acceptance that the Federal Reserve (Fed) will start cutting interest rates in June, along with Tuesday’s disappointing US macro data, keeps the USD bulls on the defensive and continues to act as a tailwind for the Gold price. Apart from this, geopolitical tensions and concerns about a slowdown in China should contribute to limiting the downside for the safe-haven XAU/USD.

Daily digest market movers: Gold price ticks lower amid some repositioning ahead of Fed Chair Powell’s testimony

Weaker US economic data released on Tuesday reaffirmed market expectations that the Federal Reserve will cut interest rates sooner rather than later and lifted the Gold price back closer to the all-time peak.
The Institute for Supply Management (ISM) reported that economic activity in the services sector expanded in February for the 14th consecutive month, albeit at a slower pace amid a decline in employment.
Separately, data published by the US Commerce Department’s Census Bureau showed that total Factory Orders fell by 3.6% MoM (-2.0% YoY) in January following a 0.3% decline in the previous month.
Apart from this, persistent geopolitical tensions and China’s economic woes tempered investors’ appetite for riskier assets and further contributed to driving flows towards the perceived safe-haven precious metal.
Bulls, meanwhile, opt to lighten their positions ahead of Fed Chair Jerome Powell’s congressional testimony, which will offer clarity on the interest rate path and provide a fresh impetus to the XAU/USD.
According to the CME Group’s FedWatch tool, the markets are pricing in a 70% chance that the Fed will start cutting rates by June, keeping the US Dollar bulls on the defensive and limiting the downside for the commodity.
Traders on Wednesday will further take cues from the release of the US ADP report on private-sector employment and JOLTS Job Openings data ahead of the closely-watched Nonfarm Payrolls report on Friday.

Technical analysis: Gold price pulls back from the vicinity of YTD top amid overbought RSI, downside seems limited

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is already flashing overstretched conditions and warrants some caution for bullish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further near-term appreciating move for the Gold price.

That said, any corrective slide is likely to find decent support near the $2,100 round figure. Any further decline might still be seen as a buying opportunity and remain limited near the $2,064-2,062 strong horizontal resistance breakpoint. The latter should act as a key pivotal point, which if broken decisively will suggest that the XAU/USD has topped out and shift the near-term bias in favour of bearish traders.

On the flip side, the $2,142-2,144 area, or the all-time peak retested on Tuesday, could offer some resistance and cap the upside for the Gold price. Some follow-through buying will push the yellow metal to uncharted territory and pave the way for a further near-term appreciating move, possibly towards the $2,200 psychological mark.