- Gold price edges higher as Fed rate cut bets keep the USD bulls on the defensive.
- Doubts over the durability of the Israel-Iran ceasefire also support the commodity.
- Traders look forward to this week’s important US macro data for a fresh impetus.
Gold price (XAU/USD) struggles to capitalize on modest intraday gains on Wednesday, though it manages to hold comfortably above the $3,300 mark and over a two-week low touched the previous day. The optimism over the Israel-Iran ceasefire remains supportive of the positive risk tone and acts as a headwind for the safe-haven precious metal. Adding to this, the emergence of some US Dollar (USD) buying, bolstered by Federal Reserve (Fed) Chair Jerome Powell’s hawkish remarks on Tuesday, turns out to be another factor capping the non-yielding yellow metal.
Meanwhile, an Israeli attack on Tehran and an Iranian missile strike raised doubts over the durability of the truce. This keeps geopolitical risk premium in play and might continue to offer some support to the Gold price. Moreover, the growing acceptance that the US central bank will resume its rate-cutting cycle as early as next month should cap any meaningful USD appreciation and limit the downside for the XAU/USD pair. Traders might also opt to wait for Powell’s second day of testimony on Tuesday and key US macro data scheduled during the latter half of the week.
Daily Digest Market Movers: Gold price lacks bullish conviction amid positive risk tone, USD uptick
- Federal Reserve Chair Jerome Powell, in his prepared remarks for the Semiannual Monetary Policy Report to Congress, said that inflation could start rising soon on the back of higher tariffs and that the central bank was in no rush to ease borrowing costs. Powell added that many paths are possible for monetary policy and that lower inflation and weaker labor hiring could lead to an earlier rate cut.
- Traders now seem to have fully priced in at least 50 basis points of Fed rate reductions by year-end and also see a roughly 20% probability of a rate cut at the July meeting. The US Dollar (USD) languishes near a one-week low touched on Tuesday on the back of dovish Fed expectations and supports the non-yielding Gold price on Wednesday following the previous day’s slide to over a two-week low.
- US President Donald Trump criticized both Israel and Iran for breaching a complete ceasefire deal shortly after announcing it. Moreover, media reports stated that recent US airstrikes on Iran’s nuclear facilities likely did not destroy the core components, but merely delayed Tehran’s program by a few months. Trump, however, reiterated that Iran’s nuclear sites were completely destroyed.
- Nevertheless, the ceasefire between Israel and Iran appears to be holding for now, with both sides claiming victory in the war and warning they were ready to renew hostilities if the other attacks. This keeps the geopolitical risk premium in play and should continue to offer support to the safe-haven Gold price ahead of important US macro releases scheduled during the latter half of the week.
- The final Q1 GDP print, along with Durable Goods Orders and the usual Weekly Initial Jobless Claims data, will be published on Thursday. The focus, however, will remain glued to the US Personal Consumption Expenditures (PCE) Price Index on Friday, which will play a key role in influencing market expectations about the Fed’s rate-cut path. This, in turn, will drive the USD and the XAU/USD pair.
Gold price needs to find acceptance below 200-period SMA to back the case for deeper losses
From a technical perspective, the overnight downfall confirmed a breakdown through a short-term ascending channel and favored bearish traders. Moreover, oscillators on daily/4-hour charts have started gaining negative traction and suggest that the path of least resistance for the Gold price is to the downside. Hence, any subsequent move up could be seen as a selling opportunity and remain capped near the trend-channel support breakpoint, around the $3,368-3,370 region. A sustained strength beyond, however, could allow the commodity to reclaim the $3,400 round figure.On the flip side, bearish traders might now await acceptance below the $3,300 mark before placing fresh bets and positioning for a fall toward the $3,245 region. The downward trajectory could extend further and eventually drag the Gold price to the $3,210-$3,200 horizontal support en route to the $3,175 area.
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