Gold price drifts back closer to near multi-month low, seems vulnerable to slide further

Gold price (XAU/USD) surrenders its modest intraday recovery gains and retreats to the lower end of its daily range, around the $1,820 region during the first half of the European session on Thursday. The precious metal did get a minor lift in the wake of a modest intraday US Dollar (USD) downtick, though lacked follow-through buying. The initial market reaction to Wednesday's rather unimpressive US macro data, meanwhile, turns out to be short-lived amid growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer.

Hawkish Fed expectations, meanwhile, trigger a fresh leg up in the US Treasury bond yields, which assists the US Dollar (USD) to stall its corrective slide from an 11-month peak and attracts fresh sellers around the Gold price. The XAU/USD, however, manages to hold above the $1,815 level or its lowest level since March touched on Tuesday. Traders seem to place aggressive bets and prefer to wait for more clarity about the Federal Reserve's (Fed) next policy move, especially after the mixed economic data released from the United States (US) on Wednesday.

A report published by Automatic Data Processing (ADP) on Wednesday shows signs of a cooling labor market in the United States (US). Furthermore, a survey from the Institute for Supply Management (ISM) indicated a moderation in the US services sector, giving the Fed some incentive to stop raising interest rates. This triggers a corrective decline in the US bond yields and prompts traders to lighten their USD bullish bets. The US macro data remains consistent with expectations for solid economic growth in the third quarter and should allow the Fed to keep rates higher for longer.

Moreover, the recent comments by several Fed officials backed the case for further policy tightening to bring inflation back to the 2% target, keeping the door open for at least one more Fed rate hike in 2023. Hence, it will be prudent to wait for strong follow-through buying before confirming that the Gold price has formed a near-term bottom and positioning for any meaningful recovery move. Market participants now look to the release of the US Weekly Initial Jobless Claims for short-term opportunities later during the early North American session.

Daily Digest Market Movers: Gold price fades an intraday uptick amid Fed rate hike jitters

• Gold price attempted a modest intraday recovery from its lowest level since March, though the uptick run out of steam near the $1,830 level during the early European session. 
• The benchmark 10-year US Treasury yield remains elevated near the 16-year top touched on Tuesday and helps limit the USD corrective slide from its highest level since November 2022.
• The downside seems limited for now in the wake of the uncertainty over the Federal Reserve's (Fed) next policy move and ahead of the crucial US monthly jobs report (NFP) on Friday.
• The US ADP report showed that private-sector employers added 89K jobs in September as compared to the previous month's upwardly revised reading of 180K.
• The US ISM Services PMI declined from 54.5 to 53.6 in September, forcing investors to trim their bets for one more Fed rate hike move by the end of this year. 
• The Fed is still expected to stick to its hawkish stance and keep interest rates higher for longer, which, in turn, keeps a lid on any meaningful recovery for the XAU/USD. 
• The US NFP report will now be looked upon for cues about the Fed's future rate-hike path and should help determine the next leg of a directional move for the metal.

Technical Analysis: Gold price seems poised to weaken further towards the $1,800 mark

From a technical perspective, the lack of any follow-through buying and the emergence of fresh selling at higher levels suggests that the path of least resistance for the Gold price is to the downside. Hence, a subsequent slide back towards testing the $1,815, or a multi-month low touched on Tuesday, looks like a distinct possibility. The next relevant support is pegged near the $1,800 round-figure mark, which if broken decisively will expose the next relevant support near the $1,770-1,760 region.

On the flip side, the daily swing high, around the $1,830 zone, now seems to act as an immediate strong resistance. A sustained strength beyond, however, might trigger a short-covering rally and lift the Gold price to the $1,850 resistance en route to the $1,858-1,860 barrier. On the flip side, the $1,815, or a multi-month low seems to have emerged as an immediate strong support. This is followed by the $1,800 round-figure mark, which if broken decisively will expose the next relevant support near the $1,770-1,760 region.