Gold price hangs near multi-week low amid modest USD strength, focus remains on FOMC minutes

Gold price (XAU/USD) drifts lower for the sixth successive day on Wednesday and currently trades just above a three-week low touched the previous day, still above the $2,600 round-figure mark. Diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed) lift the US Dollar (USD) to its highest level since August 16 and turn out to be a key factor undermining demand for the non-yielding bullion. 

Moreover, news of a possible ceasefire between Lebanon's Hezbollah and Israel further undermines the safe-haven Gold price and contributes to the downtick amid some technical selling following the overnight breakdown below the $2,630 static support. Traders, however, might refrain from placing aggressive bearish bets around the Gold price and opt to move to the sidelines ahead of the release of the FOMC meeting minutes. 

Daily Digest Market Movers: Gold price continues to be pressured by bullish USD, smaller Fed rate cut bets

• The US Dollar held steady near a multi-week top touched last Friday amid diminishing odds for a more aggressive policy easing by the Federal Reserve, which dragged the Gold price below the $2,630 pivotal support on Tuesday. 
• According to the CME Group's FedWatch Tool, investors are now pricing in over an 85% chance of a 25-basis-points Fed rate cut move at the November meeting and a 50 bps reduction in borrowing costs by the end of this year. 
• New York Fed President John Williams said on Tuesday that it will be appropriate again to bring interest rates down over time and that September's 50bps rate cut should now be seen as the rule of how we act in the future.
• Separately, Fed Governor Adriana Kugler said that approach to any policy decision will continue to be data dependent and that he will support additional rate cuts if progress on inflation continues as expected.
• Furthermore, Boston Fed President Susan Collins noted that current monetary policy is helping to cool inflation, but the US economy and labor markets still appear strong, and core inflation still remains elevated.
• Meanwhile, Fed Vice Chair Philip Jefferson said that economic activity continues to grow at a solid pace, while inflation has eased substantially and the labor market has cooled from its formerly overheated state.
• The yield on the benchmark 10-year US government bond holds steady above the 4% threshold, which continues to exert some pressure on the non-yielding bullion for the sixth successive day on Wednesday. 
• On the geopolitical front, Iran-backed Hezbollah hinted on Tuesday that it may be open to a ceasefire and notably omitted the end of the Gaza war as a condition for halting the conflict on the Lebanon-Israel border. 
• Investors now look to the September FOMC meeting minutes for cues about the future rate-cut path, ahead of the US consumer inflation figures and the US Producer Price Index on Thursday and Friday, respectively. 

Technical Outlook: Gold price could extend the corrective decline once the $2,600 mark is broken decisively

From a technical perspective, the overnight breakdown through the $2,630 support, or the lower boundary of a short-term trading range, could be seen as a fresh trigger for bearish traders. That said, oscillators on the daily chart – though have been losing traction – are yet to confirm a negative bias. Hence, it will be prudent to wait for some follow-through selling and acceptance below the $2,600 mark before positioning for further losses. The Gold price might then extend the corrective slide towards the next relevant support near the $2,560 zone en route to the $2,535-2,530 region and the $2,500 psychological mark.

On the flip side, the trading range support breakpoint, around the $2,630-2,635 region, now seems to act as an immediate hurdle. Any subsequent move up could be seen as a selling opportunity and remain capped near the $2,657-2,658 horizontal barrier. A sustained strength beyond has the potential to lift the Gold price to the $2,670-$2,672 supply zone, above which bulls might aim to challenge the all-time high, around the $2,685-2,686 zone touched in September. This is closely followed by the $2,700 mark, which if cleared will set the stage for an extension of a well-established multi-month-old uptrend.