Gold price retreats from over one-week top, remains below 50-day SMA ahead of FOMC minutes

Gold price (XAU/USD) fails to break through the 50-day Simple Moving Average (SMA) barrier and trims a part of its intraday gains to over a one-week high touched during the early European session on Wednesday. Traders now seem reluctant to place fresh bullish bets and opt to wait for the release of the highly-anticipated FOMC meeting minutes. Investors will scrutinize the minutes for fresh cues about the Federal Reserve's (Fed) rate-cut path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.

In the meantime, the markets have fully priced out the possibility of early rate cuts by the Fed in the wake of a still resilient US economy, which remains supportive of elevated US Treasury bond yields. This, in turn, acts as a tailwind for the buck and caps the upside for the Gold price. That said, persistent worries about geopolitical tensions stemming from conflicts in the Middle East and the prolonged Russia-Ukraine war might continue to lend some support to the safe-haven precious metal. Hence, it will be prudent to wait for strong follow-through selling before positioning for a meaningful intraday slide.

Daily Digest Market Movers: Gold price eases from one-week high as elevated US bond yields underpin USD

• A combination of supporting factors assists the Gold price to steadily climb back closer to a one-week peak and the 50-day SMA barrier during the Asian session on Wednesday.
• The markets are pricing in four 25 basis points interest rate cuts by the Federal Reserve in 2024, starting from June, which weighs on the US Dollar and lends support to the metal.
• Investors remain concerned about the risk of a further escalation of tensions in the Middle East in the wake of a string of attacks on shipping in the Red Sea by Houthi rebels in Yemen.
• US officials said last week that Russia is developing a space-based anti-satellite nuclear weapon, though President Vladimir Putin said that Moscow is against the deployment of nuclear weapons in space.
• A White House official said that the US will announce a major sanctions package against Russia on Friday to hold President Vladimir Putin accountable for the two-year war on Ukraine.
• The People’s Bank of China lowered the five-year loan prime rate by 25 bps – the biggest cut since it was introduced in 2019 – to support real estate developers and bolster economic growth.
• The yield on the benchmark 10-year US government bond holds comfortably above the 4.0% mark as traders keenly await the FOMC meeting minutes for fresh cues about the rate-cut path.
• Hawkish signals from policymakers will likely renew jitters that the Fed will keep rates higher for longer, which, in turn, should boost the buck and may not be good news for the XAU/USD.

Technical Analysis: Gold price bulls face rejection near 50-day SMA pivotal resistance, downside seems limited

From a technical perspective, sustained strength and acceptance above the 50-day SMA will set the stage for an extension of the recent recovery from the $1,984 region, or a two-month low touched last week. Given that oscillators on the daily chart have been gaining positive traction, the Gold price might then accelerate the positive move towards an intermediate hurdle near the $2,044-2,045 region en route to the $2,065 supply zone.

On the flip side, the $2,016-2,015 area could protect the immediate downside ahead of the 100-day SMA, currently pegged near just below the $2,000 psychological mark. Some follow-through selling, leading to a subsequent break through the $1,984 area, or the monthly low, will be seen as a fresh trigger for bearish traders. The subsequent downfall has the potential to drag the Gold price to the very important 200-day SMA support near the $1,965 region.