Gold price retreats from all-time high amid profit-taking, potential downside seems limited

Gold price (XAU/USD) trims gains after touching a fresh record peak, around the $2,482-2,483 region during the Asian session on Wednesday and currently trades near the lower end of its daily range. The prevalent risk-on environment – as depicted by an extension of the uptrend across the global equity markets – prompts some intraday profit-taking amid a slightly overbought Relative Strength Index (RSI) on the daily chart. Apart from this, the pullback lacks any obvious fundamental catalyst and is likely to remain cushioned amid dovish Federal Reserve (Fed) expectations. 

Investors now seem convinced that the US central bank would begin its rate-cutting cycle in September, which keeps the US Treasury bond yields depressed near a multi-month low. This, in turn, fails to assist the US Dollar (USD) to register any meaningful recovery from over a three-month trough touched earlier this week and should continue to act as a tailwind for the non-yielding Gold price. Hence, any subsequent slide might still be seen as a buying opportunity and remain limited. Traders now look to the US Industrial Production figures for short-term impetus. 

Daily Digest Market Movers: Gold price is undermined by risk-on mood, Fed  rate cut bets warrant caution for bears

• The recent comments by Federal Reserve officials reaffirmed expectations of an interest rate cut in September, which continues to drive flows toward the non-yielding Gold price. 
• Fed Chair Jerome Powell said on Monday that inflation readings during the second quarter showed more progress was being made on bringing the pace of price increases to the target.
• San Francisco Fed President Mary Daly showed growing confidence that inflation is heading toward the central bank's goal and added that she expects a policy adjustment at some point.
• Fed Governor Adriana Kugler noted on Tuesday that downside risks to employment have become more balanced, and continued labor market rebalancing suggests inflation will move toward the target.
• Kugler further added that it would be appropriate to begin easing monetary policy later this year if economic conditions continue to evolve favorably and if the labor market cools too much.
• Traders are now pricing in multiple rate cuts by year-end, dragging the yield on the benchmark 10-year US government bond and the rate-sensitive 2-year Treasury yield to a multi-month low.
• Meanwhile, the US Dollar draws support from Tuesday's upbeat US Retail Sales data, which pointed to consumer resilience and bolstered economic growth prospects for the second quarter.
• The Census Bureau reported Retail Sales in the US remained unchanged in June and the previous month's revised higher to show a growth of 0.3% as compared to the 0.1% reported originally. 
• This, along with an extension of a bullish run across the global equity markets, might hold back traders from placing fresh bullish bets around the safe-haven XAU/USD and cap gains.

Technical Analysis: Gold price seems poised to appreciate further while above $2,430-2,425 resistance-turned-support

From a technical perspective, the overnight sustained breakout through the $2,425-2,430 supply zone and a subsequent move beyond the $2,450 area, or the previous all-time peak, could be seen as a fresh trigger for bullish traders. That said, oscillators on the daily chart have just started moving in overbought territory and warrant some caution before positioning for additional gains. Hence, any further move-up is more likely to face some resistance and pause near the $2,500 psychological mark. 

On the flip side, any meaningful slide below the $2,450 area might now be seen as a buying opportunity and remain limited near the $2,430-2,425 resistance breakpoint, now turned support. A convincing break below the latter, however, might prompt some technical selling and drag the Gold price to the $2,400 mark. Some follow-through selling below the $2,390 area could pave the way for deeper losses toward testing the next relevant support near the $2,360 region.