Gold price sticks to modest gains, remains below multi-month top ahead of Fed’s Powell

• Gold price regains positive traction on Friday and is underpinned by rising Fed rate cut bets.
• Growing concerns about a global economic downturn lend additional support to the metal.
• The risk-on mood might cap gains ahead of the US ISM PMI and Fed Chair Powell’s speech.

Gold price (XAU/USD) attracts some dip-buying during the Asian session on Friday and reverses a major part of the previous day's losses. The precious metal currently trades around the $2,040 region, up over 0.15% for the day and well within the striking distance of its highest level since May 5 touched on Wednesday. Data released from the United States (US) on Thursday showed that inflation continued to moderate in October and a slowing labour market, validating the view that the Federal Reserve (Fed) is done raising interest rates. The dovish outlook turns out to be a key factor benefitting the non-yielding yellow metal.

Meanwhile, a duo of Fed officials pushed back against expectations for a quick pivot to rate cuts and left the door open to further policy tightening should the progress on inflation stall. This, however, does little to dim the prospects for an imminent shift in the Fed's policy stance and keeps a lid on the recent US Dollar (USD) recovery from its lowest level since August 11. Apart from this, mixed signs on the strength of China's economy and darkening global outlook lend support to the safe-haven Gold price. That said, the recent risk-on rally in the US equity markets might cap the XAU/USD ahead of Fed Chair Jerome Powell's speech.

Daily Digest Market Movers: Gold price continues to draw support from dovish Federal Reserve expectations

• Bets that the Federal Reserve will not hike rates again and may start easing its monetary policy by the first half of 2024 continue to lend some support to the non-yielding Gold price.
• The CME group's FedWatch Tool indicates an even possibility that the Fed will cut policy rates as early as March 2024 and a near 80% chance of such a move at the May FOMC meeting.
• The bets were reaffirmed by the key inflation data on Thursday, which showed that the Personal Consumption Expenditures (PCE) Price Index remained unchanged in October.
• Over the 12 months, the PCE Price Index registered the smallest year-on-year increase since March 2021 and decelerated from 3.4% to 3.0% during the reported month.
• Moreover, the gauge that strips out volatile food and energy prices rose by a modest 0.2% in October and saw an annual rise of 3.5%, further pointing to signs of easing inflation.
• Another report showed that Jobless Claims rose to 218K last week and 1.93 million people were collecting unemployment benefits the week that ended November 18 – the most in two years.
• New York Fed President John Williams said on Thursday that it will be appropriate to maintain a restrictive stance for quite some time to bring inflation back to the 2% target.
• San Francisco Fed President Mary Daly noted that interest rates are in a very good place to control inflation, though she is not thinking about cuts and that it was too soon to say if hikes are finished.
• Given the recent mixed signals, the market attention will remain glued to Fed Chair Jerome Powell's speech, which could infuse some volatility and provide a fresh impetus to the XAU/USD.
• Traders will also confront the release of the US ISM Manufacturing PMI, which is expected to improve to 47.6 in November, though remains in contraction territory for the 12th straight month.

Technical Analysis: Gold price seems poised to appreciate further, bulls await a move beyond the multi-month peak

From a technical perspective, any subsequent move-up is likely to face some resistance near the $2,052 area, or a multi-month peak. With oscillators on the daily chart holding comfortably in the positive territory, some follow-through buying will be seen as a fresh trigger for bullish traders and allow the Gold price to accelerate the momentum further towards challenging the all-time high, around the $2,079-2,080 zone touched in May.

On the flip side, the overnight swing low, around the $2,030 area, could act as immediate support ahead of the $2,020 zone and the $2,010-$2,008 strong horizontal resistance breakpoint. The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag the Gold price further below the $2,000 psychological mark, towards testing the next relevant support near the $1,990 region.