Gold price edges higher amid softer USD, ahead of US consumer sentiment report

Gold price (XAU/USD) climbs to a fresh daily top, around the $3,350 area during the first half of the European session on Friday and looks to build on the previous day's goodish rebound from an over one-week low. The US Dollar (USD) drifts lower in reaction to dovish remarks from Federal Reserve (Fed) Governor Christopher Waller and moves away from its highest level since June 23 touched on Thursday. This, along with growing concerns about US President Donald Trump's erratic trade policies and their impact on the global economy, turns out to be a key factor lending some support to the commodity.

Any meaningful USD downfall, however, seems elusive in the wake of the growing acceptance that the Fed would delay cutting interest rates, amid signs that the Trump administration's increasing import taxes are passing through to consumer prices. Furthermore, a generally positive tone around the equity markets should contribute to capping gains for the safe-haven Gold price. Nevertheless, the XAU/USD pair remains on track to register modest losses for the first time in three weeks as traders now look forward to the US macro data to grab short-term opportunities later during the North American session.

Daily Digest Market Movers: Gold price benefits as USD drifts lower on dovish remarks from Fed's Waller

• Federal Reserve (Fed) Governor Christopher Waller said late Thursday that rising risks to the economy favour easing the policy rate. The central bank should cut its interest rate target in July amid evidence that the labour market is growing weaker, Waller added further. This, in turn, exerts some downward pressure on the US Dollar during the Asian session on Friday.
• Meanwhile, traders are pricing in the possibility of 50 basis points worth of policy easing by the Fed this year. Furthermore, growing worries about the potential economic fallout from US President Donald Trump's erratic trade policies might continue to act as a tailwind for the safe-haven Gold price. Trump recently announced a 50% tariff on copper imports into the US.
• Adding to this, Trump notified leaders of 25 countries about new tariff rates that will kick in on August 1, and also plans to send letters to more than 150 countries notifying them their tariff rates could be 10% or 15%. This should keep investors on edge and warrants some caution before positioning for any meaningful depreciating move for the precious metal.
• On the economic data front, the US Commerce Department reported on Thursday that Retail Sales rose 0.6% in June, defying market expectations and signaling a modest rebound in consumer spending. This marked a significant improvement after a 0.9% fall in May and a 0.1% dip in April, providing a glimmer of optimism for an economy that has been struggling.
• Adding to this, US Initial Jobless Claims dropped for the fifth straight week, to 221,000 during the week ending July 12, or the lowest level in three months. This suggested that the US labor market remains resilient despite worries about the inflationary effect of higher US tariffs, reaffirming bets that the Fed could delay cutting interest rates and favoring the USD bulls.
• Fed governor Adriana Kugler said that the still-restrictive policy stance is important to keep longer-run inflation expectations anchored, and it will be appropriate to hold the policy rate at the current level for some time. Separately, Atlanta Fed President Raphael Bostic noted that the economic outlook remains highly uncertain and rate cuts might be difficult in the short run.
• The Fed is widely expected to keep its benchmark interest rate in the 4.25%-4.50% range at the upcoming policy meeting later this month. This, in turn, could act as a headwind for the non-yielding yellow metal. Traders now look forward to the release of the Preliminary Michigan US Consumer Sentiment and Inflation Expectations to grab short-term opportunities.

Gold price needs to breakout through trading range hurdle, near $3,365 area for bulls to seize control

From a technical perspective, the recent range-bound price action witnessed since the beginning of this month constitutes the formation of a rectangle chart pattern and points to indecision among traders. Moreover, neutral oscillators on the daily chart warrant some caution before positioning for the next leg of a directional move. Hence, any further slide might continue to find decent support ahead of the $3,300 round figure. A convincing break below, however, could make the Gold price vulnerable to accelerate the fall towards the July swing low, around the $3,248-3,247 zone.

On the flip side, any positive move beyond the $3,352 immediate hurdle could attract fresh buyers and remain capped near the $3,365-3,366 region, or the top boundary of the short-term trading range. A subsequent move beyond the latter, however, could trigger a short-covering rally and allow the Gold price to reclaim the $3,400 round figure. The upward trajectory could extend further towards testing the next relevant hurdle near the $3,434-3,435 area.