Gold price struggles for a firm near-term direction amid Fed rate uncertainty

• Gold price is seen oscillating in a narrow trading band during the Asian session on Friday.
• Dovish Fed expectations continue to lend some support to the non-yielding yellow metal.
• A goodish pickup in the US bond yields acts as a tailwind for the USD and caps the upside.

Gold price (XAU/USD) posted modest gains on Thursday amid a weaker US Dollar (USD), albeit lacked follow-through buying and remained below the $2,000 psychological mark through the Asian session on Friday.

Despite Tuesday’s hawkish FOMC minutes, investors seem convinced that the US central bank will keep rates steady rather than hiking. This, in turn, keeps a lid on this week’s USD recovery from its lowest level since August 31 and continues to act as a tailwind for the non-yielding yellow metal.

That said, the US macro data released on Wednesday pointed to signs of resilience in the labor market and raised uncertainty over the Fed’s next policy move. This, along with a goodish pickup in the US Treasury bond yields, lends some support to the Greenback and caps the upside for the US Dollar-denominated Gold price. Nevertheless, the precious metal remains on track to register the second consecutive weekly gain as traders look to the release of the flash US PMIs for some impetus on the last day of the week.

Daily Digest Market Movers: Gold price lacks any firm direction amid mixed Fed cues

• A combination of diverging forces fails to provide any meaningful impetus to the Gold price and leads to a subdued/range-bound price action during the Asian session on Friday.
• A disconnect between the Federal Reserve’s hawkish outlook and market expectations for rate cuts in 2024 is holding back traders from placing directional bets around the XAU/USD.
• The FOMC meeting minutes released on Tuesday revealed that policymakers backed the case to keep interest rates higher for longer to tame inflation.
• Bets for a rate hike in December shrunk to zero following the release of the October inflation report. Moreover, the markets are pricing over a 25% chance of a rate cut as early as March 2024.
• Wednesday’s upbeat US labor market and consumer sentiment data, along with rebounding US Treasury bond yields, lend support to the USD and cap gains for the precious metal.
• Dovish Fed expectations, meanwhile, warrant some caution for the USD bulls and might continue to lend some support to the commodity ahead of the flash US PMI prints for November.

Technical Analysis: Gold price struggles to move back above the $2,000 psychological mark

The Gold price, so far, has been struggling to move back above the $2,000 psychological mark. This comes on top of the recent repeated failures ahead of the $2,010 level, or a multi-month peak touched in October and warrants caution for bullish traders. That said, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for the emergence of some dip-buying near the $1,989-1,988 zone.

This is followed by support near the $1,979-1,978 region and the weekly low, around the $1,965 area. A convincing break below the latter might expose the 200-day Simple Moving Average (SMA), currently around the $1,940 level, and $1,933-1,932 confluence, comprising the
50- and 100-day SMAs.

On the flip side, the $2,000 mark might continue to act as an immediate barrier ahead of the $2,007 area and the $2,009-2,010 region. Some follow-through buying will be seen as a fresh trigger for bullish traders and allow the Gold price to accelerate the positive move further towards the $2,022 resistance en route to the next relevant hurdle near the $2,040 region.