Gold remains depressed below $4,200; lacks follow-through as traders await US data

Gold (XAU/USD) recovers slightly from the daily low, though it keeps the red below the $4,200 mark through the first half of the European session on Thursday amid mixed fundamental cues. A generally positive tone around the equity markets is seen as a key factor exerting some downward pressure on the safe-haven precious metal. However, geopolitical uncertainties stemming from the protracted Russia-Ukraine war, along with dovish US Federal Reserve (Fed) expectations, help limit the downside for the commodity.

Investors seem convinced that the central bank will lower borrowing costs again next week amid signs of a softening US labor market and cooling economy. This, in turn, fails to assist the US Dollar (USD) in registering any meaningful recovery from its lowest level since late October, touched on Wednesday, and keeps the non-yielding Gold above the weekly low. Next on tap is the US economic data, which will drive the USD and the XAU/USD pair ahead of the US Personal Consumption Expenditure (PCE) Price Index on Friday.

Daily Digest Market Movers: Gold sticks to negative bias as positive risk tone counters dovish Fed and weaker USD

• Automatic Data Processing reported on Wednesday that private payrolls unexpectedly fell by 32K in November, compared to the 47K increase (revised from 42K) in the previous month and below expectations of 5K job additions. This suggested that the slowdown in the US labor market intensified last month.
• Furthermore, the recent US macro data pointed to a gradual cooling of the economy, which, along with comments from several Federal Reserve officials, lifted bets for a 25-basis-point rate cut at the upcoming FOMC meeting next week. This continues to act as a tailwind for the non-yielding Gold on Thursday.
• Meanwhile, the prospects for lower US interest rates remain supportive of the underlying bullish sentiment around the equity markets. Apart from this, a modest US Dollar uptick turns out to be another factor that is seen acting as a headwind for the safe-haven commodity during the Asian session on Thursday.
• However, dovish Fed expectations might keep a lid on any meaningful USD recovery. Investors might also opt to wait for the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday for more cues about the Fed's rate-cut path and before placing directional bets around the XAU/USD pair.
• In the meantime, traders will take cues from Thursday's US economic docket – featuring Challenger Job Cuts and the usual Weekly Initial Jobless Claims – for some impetus later during the North American session. Apart from this, the broader risk sentiment could produce short-term trading opportunities.
• US special envoy Steve Witkoff will meet Ukraine's head of the National Security Council, Rustem Umerov, for talks on Thursday after failing to reach a compromise on a possible peace deal with Russian President Vladimir Putin. This keeps geopolitical risks in play and could further support the safe-haven commodity.

Gold bears await break below $4,164-4,163, or weekly low before placing fresh bets

The recent repeated failures to find acceptance above the $4,245-4,250 barrier and the subsequent slide favor the XAU/USD bears. However, mixed technical oscillators on hourly/daily charts suggest that any further slide is more likely to find decent support near the weekly swing low, around the $4,164-4,163 area, touched on Tuesday.

Some follow-through selling, however, could drag the Gold price to the $4,100 mark en route to the $4,085 confluence. The latter comprises the 200-period Exponential Moving Average (EMA) on the 4-hour chart and an ascending trend-line extending from late October, which should act as a strong near-term base.

On the flip side, the $4,245-4,250 zone might continue to act as an immediate strong barrier ahead of the $4,277-4,278 region, above which the Gold price could aim to reclaim the $4,300 round figure. A sustained strength beyond the latter will be seen as a key trigger for the XAU/USD bulls and pave the way for additional near-term gains.