Gold price flirts with weekly low amid Fed rate-cut uncertainty

Most recent article: Gold edges lower on Fed comments 

• Gold price stays weak for the second straight day amid the Fed’s hawkish outlook.
• A September rate cut by the Fed remains on the table, which caps gains for the USD.
• Persistent geopolitical tensions contribute to limiting the downside for the XAU/USD.

Gold price (XAU/USD) extends weakness into the second straight day on Wednesday, flirting with the lowest level in over a week. The overnight hawkish comments by influential Federal Reserve (Fed) officials suggested that the US central bank is unlikely to kickstart its rate-cutting cycle anytime soon amid a resilient US economy. This remains supportive of a modest uptick in the US Treasury bond yields, which is seen acting as a tailwind for the US Dollar (USD) and weighing on the non-yielding yellow metal.

Meanwhile, weaker consumer and producer prices for May keep a September Fed rate cut move on the table. This, along with the risk of further escalating geopolitical tensions in the Middle East and the protracted Russia-Ukraine war, lends some support to the safe-haven Gold price and helps limit the downside. Traders might also prefer to wait for the key US macro data – the final Q1 GDP print on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday. The latter might influence the Fed's policy decisions and provide a fresh directional impetus to the XAU/USD. 

Daily Digest Market Movers: Gold price bears seem non-committed amid Fed rate cut uncertainty

• Federal Reserve policymakers continue to argue in favor of keeping rates higher for longer, which pushes the US Treasury bond yields higher and caps the upside for the non-yielding Gold price.
• Fed Governor Michelle Bowman showed a willingness to raise borrowing costs if inflation progress stalls and said on Tuesday that they are not yet at the point where it is appropriate to cut rates.
• Separately, Fed Governor Lisa Cook noted that it would be appropriate to cut rates at some point, though a rise in inflation expectations would imply keeping monetary policy restrictive for longer.
• A survey from the Conference Board showed on Tuesday that the US Consumer Confidence Index ticked lower to 100.4 in June from 101.3 in the previous month amid worries about the economic outlook. 
• This comes on top of the recent weakness in US Retail Sales and signs of moderating inflationary pressures, which keeps hopes alive for a September Fed rate cut and acts as a headwind for the US Dollar. 
• Russia’s Foreign Ministry summoned US Ambassador Lynne Tracy earlier this week and blamed the US for a barbaric attack in Crimea, and said that retaliatory measures would “definitely follow”.
• Concerns about an all-out war between Israel and Lebanon remain alive in the wake of soaring tensions on provocations by Hezbollah, helping limit the downside for the safe-haven precious metal. 
• Traders also seem reluctant to place aggressive directional bets and now look forward to the release of the Personal Consumption Expenditures (PCE) Price Index on Friday for some meaningful impetus.

Technical Analysis: Gold price holds above ascending trendline support near $2,310 area

From a technical perspective, the recent failure to capitalize on the strength beyond the 50-day Simple Moving Average (SMA) and the subsequent slide favors bearish traders. Moreover, oscillators on the daily chart have again started gaining negative traction, suggesting that the path of least resistance for the Gold price is to the downside. That said, it will still be prudent to wait for a sustained break below a short-term ascending trendline support, currently pegged near the $2,310 area, before positioning for further losses. The XAU/USD might then weaken further below the $2,300 mark and retest the monthly swing low, around the $2,287-2,286 region. Some follow-through selling will reaffirm the negative bias and expose the 100-day SMA support near the $2,250 area. The downward trajectory could extend further towards the $2,225-2,220 region before the commodity eventually drops to the $2,200 round-figure mark.

On the flip side, any meaningful positive move now seems to confront stiff resistance near the 50-day SMA, currently near the $2,339-2,340 region, ahead of Friday's swing high, around the $2,368-2,369 zone. A sustained strength beyond the latter could lift the Gold price towards the $2,387-2,388 intermediate hurdle en route to the $2,400 round-figure mark. Some follow-through buying will negate any near-term negative bias and allow the XAU/USD to aim back to challenge the all-time peak, around the $2,450 area touched in May.