Gold price sticks to modest intraday gains, bulls seem non-committed ahead of US data

• Gold price regains some positive traction on Tuesday, albeit lacks follow-through buying.
• Sliding US bond yields undermine the USD and lend some support to the XAU/USD.
• Geopolitical risks also benefit the safe-haven metal, though the upside seems limited.

Gold price (XAU/USD) attracts some dip-buyers following the previous day’s modest pullback and holds steady above the $2,030 level during the Asian session on Tuesday. The US Dollar (USD) remains depressed in the wake of a fresh leg down in the US Treasury bond yields and turns out to be a key factor acting as a tailwind for the commodity. Moreover, the cautious market mood is seen benefitting the precious metal’s relative safe-haven status, though hawkish Federal Reserve (Fed) expectations keep a lid on any further gains.

Investors now seem convinced that the Fed will keep interest rates higher for longer in the wake of sticky inflation and a still-resilient US economy. This might hold back traders from placing aggressive bullish bets around the non-yielding Gold price ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index on Thursday. The crucial inflation data will be looked upon for cues about the likely timing of when the Fed will start cutting rates, which will drive the USD and provide a fresh impetus to the XAU/USD.

• The yield on the benchmark 10-year US government bond remains depressed near 4.275%, undermining the US Dollar and lending some support to the Gold price.
• A recession in Japan and the UK, along with continued geopolitical tensions stemming from conflicts in the Middle East, further benefit the safe-haven precious metal.
• US President Joe Biden said on Monday that he hopes to have a ceasefire in the Israel-Hamas war and a pause-for-hostages deal by Ramadan’s beginning on March 10.
• The FOMC meeting minutes released last week and comments by several Federal Reserve officials suggested that the US central bank was in no rush to cut interest rates.
• Kansas City Fed President Jeffrey Schmid said that the US central bank should be patient and wait for convincing evidence that the fight against inflation has been won.
• Markets have all but priced out the possibility of a rate cut in March and see around a 60% chance of the first 25 basis points rate cut coming at the June FOMC meeting.
• Traders now look to the US macro data due on Tuesday – Durable Goods Orders, the Conference Board’s Consumer Confidence Index and the Richmond Manufacturing Index.
• Investors this week will also confront the release of the Prelim US Q4 GDP print on Wednesday and the Personal Consumption Expenditures (PCE) Price Index on Thursday.
• The latter is considered the Fed’s preferred inflation gauge, which, in turn, will influence expectations about future rate cuts and provide fresh impetus to the XAU/USD.

Technical Analysis: Gold price looks to build on momentum beyond 50-day SMA, remains below two-week high

From a technical perspective, any subsequent move up is likely to confront some resistance near the $2,041-2,042 area, or over a two-week high touched last Thursday. Some follow-through buying will confirm a break through the 50-day Simple Moving Average (SMA) barrier and pave the way for additional gains. Given that oscillators on the daily chart have just started gaining positive traction, the Gold price might then challenge the next relevant hurdle near the $2,065 supply zone. The momentum could extend further towards reclaiming the $2,100 round figure mark for the first time since early December 2023.

On the flip side, the overnight swing low, around the $2,025 region, might continue to protect the immediate downside ahead of the 100-day SMA, currently near the $2,009 area, and the $2,000 psychological mark. A convincing break below the latter will shift the near-term bias in favour of bearish traders and drag the Gold price to the $1,984 region en route to the very important 200-day SMA support near the $1,967-1,966 zone.