Gold price remains supported by dovish Fed expectations and weaker US Dollar

• Gold price holds steady below the weekly high and seems poised to appreciate further.
• Bets that the Fed is done raising rates keep the USD depressed and lend some support.
• The prevalent risk-on mood might hold back bulls from placing fresh bets and cap gains.

Gold price (XAU/USD) struggles to capitalize on its weekly gains registered over the past two days and oscillates in a narrow trading band during the Asian session on Wednesday. The US Dollar (USD) ticks higher and recovers a part of the previous day's slump to its lowest level since September 1. Apart from this, a generally positive tone around the equity markets turns out to be another factor acting as a headwind for the safe-haven precious metal.

That said, expectations that the Federal Reserve (Fed) is done raising interest rates are keeping a lid on any meaningful USD upside and continue to lend support to the non-yielding Gold price. This, in turn, suggests that the path of least resistance for the XAU/USD is to the upside and supports prospects for an extension of the recent bounce from the 200-day Simple Moving Average (SMA), around the $1,930 area, or its lowest level since October 18 touched on Monday.

Daily Digest Market Movers: Gold price remains supported by dovish Fed expectations, bolstered by softer US CPI data

• The US Bureau of Labor Statistics (BLS) reported on Tuesday that the headline CPI was unchanged in October, while the yearly rate registered its smallest rise in two years and decelerated to 3.2% from 3.7% in September.
• The data reaffirms expectations that the Federal Reserve (Fed) has ended its policy tightening cycle and lifts bets for a rate cut in May 2024, which, in turn, triggered the overnight steep decline in the US Treasury bond yields.
• The yield on the benchmark 10-year US government bond languishes near a two-month low, keeping the US Dollar depressed near its lowest level since September 1 and lending some support to the non-yielding Gold price.
• The prevalent risk-on mood is seen acting as a headwind for the safe-haven precious metal, though the fundamental backdrop favours bullish traders and suggests that the path of least resistance remains to the upside.
• China's Industrial Production grew by 4.6% YoY in October, better than the 4.5% rise in the previous month and consensus estimates, and the monthly Retail Sales advanced more than expected, by 7.4% over the past 12 months.
• China's Fixed Asset Investment climbed by 2.9% YoY during the reported month as compared to the 3.1% anticipated and September reading. The data does little to influence the market sentiment or provide any impetus.
• Market participants now look to the release of the US Producer Price Index (PPI) and monthly Retail Sales figures for short-term opportunities later during the early North American session this Wednesday.
• The headline US PPI is anticipated to have risen by 0.1% in October, down from 0.5% in the previous month, and the yearly rate is seen falling below the 2.0% mark, though the core PPI is expected to match September's readings.
• The US Retail Sales possibly contracted by 0.3% in October, down sharply from the 0.7% rise registered in the previous month, while sales excluding automobiles are expected to remain flat MoM.

Technical Analysis: Gold price needs to move beyond the $1,980 barrier for bulls to seize back near-term control

From a technical perspective, any subsequent move beyond the overnight swing high, around the $1,970-1,971 area, is likely to confront some resistance near the $1,980 region. Some follow-through buying has the potential to lift the Gold price towards the $1,991-1,992 hurdle en route to the $2,000 psychological mark and a multi-month peak, around the $2,009-2,010 region. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move.

On the flip side, a corrective pullback might now attract some buyers and remain limited near the $1,950-1,949 area. This is followed by a cluster of supports near the 200-day SMA, currently pegged around the $1,935 region, and the 100- and the 50-day SMAs confluence near the $1,928-1,925 zone. Failure to defend the said support levels would make the Gold price vulnerable to accelerate the fall towards the $1,900 round figure.