Gold price flat lines below $2,400 amid mixed fundamental cues, downside remains cushioned

Gold price (XAU/USD) attracts some dip-buyers near the $2,379-2,378 region on Wednesday and climbs to a fresh daily peak heading into the European session. The incoming softer US economic data suggested that the world's largest economy was slowing faster than initially expected. This, in turn, fueled speculations about bigger interest rate cuts by the Federal Reserve (Fed), which acts as a tailwind for the non-yielding yellow metal. 

Apart from this, concerns about an economic slowdown in China and the risk of a further escalation of geopolitical tensions in the Middle East lend additional support to the safe-haven Gold price. That said, a goodish pickup in the US Dollar (USD) demand, bolstered by a further recovery in the US Treasury bond yields, along with a generally positive risk tone, might keep a lid on any meaningful appreciating move for the XAU/USD. 

Daily Digest Market Movers: Gold price bulls remain on the sidelines amid modest USD strength, positive risk tone

• A global sell-off in the equity markets – triggered by fears of the US tipping into recession – seems to have eased amid some bargain buying and exert some pressure on the safe-haven Gold price on Wednesday.
• The US Treasury bond yields build on the overnight advance, which was their biggest rise since early June – and lend support to the US Dollar, which is further seen undermining the non-yielding yellow metal.
• Government data released on Tuesday showed that the US trade deficit fell by 2.5%, to $73.1 billion in June from $75.0 billion in May owing to a 1.5% rise in exports of aircraft and US-produced oil and gas.
• The markets are pricing in a 100% chance that the Federal Reserve will start lowering borrowing costs at the upcoming policy meeting in September and a near 70% probability of a 50-basis-point rate cut. 
• This, in turn, should keep a lid on the US bond yields and the USD, which, along with geopolitical risks stemming from the ongoing conflicts in the Middle East, might act as a tailwind for the XAU/USD.
• Lebanese group Hezbollah launched a series of drone and rocket attacks against Israel on Tuesday in retaliation for Israel’s reported killings of a top Hezbollah commander and Hamas leader last week. 
• The market might now move into a typical pattern of consolidation in the absence of any relevant macro data from the US and await the next major fundamental catalyst before placing fresh directional bets.

Technical Analysis: Gold price struggles to move back above $2,400, 50-day SMA pivotal support holds the key

From a technical perspective, any subsequent decline might continue to find some support near the 50-day Simple Moving Average (SMA), pegged near the $2,368-2,367 region. This is followed by last week's swing low, around the $2,353-2,352 zone and the $2,344 area, or the 100-day SMA. Sustained weakness below the latter will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Given that oscillators on the daily chart have just started gaining negative traction, the Gold price might then accelerate the downfall towards challenging the $2,300 round figure.

On the flip side, recovery back above the $2,400 mark is likely to face some resistance near the overnight swing high, around the $2,418 region. Some follow-through buying could lift the Gold price beyond the $2,430 barrier, towards the next relevant hurdle near the $2,448-2,450 horizontal zone. The momentum could extend further towards the $2,468-2,469 region en route to the all-time peak, near the $2,483-2,484 area touched in July. Bulls might then aim to conquer the $2,500 psychological mark, which if cleared decisively will set the stage for a further near-term appreciating move.