Gold price edges higher on softer US Dollar, lacks follow-through ahead of critical US data

Gold price (XAU/USD) attracts some buying during the early European session and turns positive for the second successive day on Wednesday, albeit lacks follow-through and remains in a multi-day-old trading range below the $2,040-$2,042 zone. Traders pushed back their expectations for the first interest rate cut by the Federal Reserve (Fed) to May from March in the wake of a still-resilient US economy. This, along with the underlying bullish tone around the equity markets, turns out to be a key factor acting as a headwind for the non-yielding yellow metal. 

That said, persistent worries about a further escalation of military action in the Middle East and the uncertain global economic outlook continue to lend some support to the safe-haven Gold price. Furthermore, reiterating US Treasury bond yields keeps the US Dollar (USD) bulls on the defensive and benefits the commodity. Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for this week's important US macro releases – the Advance Q4 GDP print on Thursday and the Core PCE Price Index – the Fed's preferred inflation gauge – on Friday. 

Daily Digest Market Movers: Gold price fails to builds on modest gains amid delayed Fed rate-cut bets

• Retreating US Treasury bond yields keep the US Dollar (USD) bulls on the defensive and turn out to be a key factor lending some support to the Gold price amid geopolitical tensions in the Middle East.
• US military forces struck 3 facilities used by Iranian-affiliated militant groups in western Iraq in direct response to a series of escalatory attacks, raising the risk of a further escalation of tensions in the Middle East.
• The incoming US macro data suggested that the economy is in good shape and gives the Federal Reserve more headroom to keep interest rates higher for longer, which should cap the non-yielding bullion.
• The current market pricing indicates a greater chance of the first interest rate cut by the Fed in May, which was initially expected in March, and less aggressive policy easing than is now anticipated by investors.
• The lack of strong follow-through buying warrants caution for bulls ahead of this week's key macro releases – the flash global PMIs, the Advance US Q4 GDP print and the US Core PCE Price Index.
• The crucial US inflation data will influence expectations about the Fed's future policy actions, which, in turn, will drive the USD demand and determine the near-term trajectory for the XAU/USD.

Technical Analysis: Gold price might continue to face stiff resistance near the $2,040-2,042 supply zone

From a technical perspective, the $2,022-2,020 region might offer some support to the Gold price ahead of the weekly trough, around the $2,017-2,016 zone touched on Monday. This is followed by over a one-month low, around the $2,000 psychological mark set last week, which if broken decisively will be seen as a fresh trigger for bearish traders. The XAU/USD might then turn vulnerable to accelerate the fall towards the $1,988 intermediate support before eventually dropping to the 100-day Simple Moving Average (SMA), currently around the $1,972 area, en route to and the 200-day SMA, near the $1,964-1,963 region.

On the flip side, any meaningful strength beyond the $2,029-2,030 immediate hurdle might continue to confront stiff resistance near the $2,040-2,042 supply zone. Some follow-through buying, however, might negate the near-term bearish outlook and trigger a short-covering rally. The Gold price might then climb to the $2,077 area before aiming to reclaim the $2,100 round-figure mark.