Gold price holds steady near weekly top amid Fed rate cut bets, risk-on mood cap gains

• Gold price consolidates near the weekly top amid a modest USD uptick and the risk-on mood.
• The fundamental backdrop favours bullish traders and supports prospects for further gains.
• The US Consumer Confidence Index is eyed for some impetus ahead of the US PCE Price Index.

Gold price (XAU/USD) struggles to capitalize on its weekly gains registered over the past two days and ticks lower during the Asian session on Wednesday. The precious metal currently trades around the $2,040 supply zone and seems poised to appreciate further in the wake of the Federal Reserve's (Fed) dovish shift last week. In fact, the so-called “dot plot” indicated that the Fed’s inflation fight won’t require another rate hike and that the key interest rate has already peaked at its current 22-year high of 5.25-5.50%. This keeps the US Treasury bond yields depressed near a multi-month low and might continue to act as a tailwind for the non-yielding yellow metal.

That said, a slew of Fed officials recently tried to temper rate cut expectations. This, along with a modest US Dollar (USD) uptick and the upbeat mood pervading across the global equity markets, keeps a lid on any meaningful appreciating move for the Gold price. Furthermore, traders opt to remain on the sidelines ahead of the US Core Personal Consumption Expenditure (PCE) Price Index on Friday. The key US inflation reading should influence the Fed's future policy decisions and provide a fresh directional impetus to the XAU/USD. In the meantime, traders on Wednesday will take cues from the release of the Conference Board's US Consumer Confidence Index.

Daily Digest Market Movers: Gold price remains supported by a shift in the Fed’s policy stance

• Growing acceptance that the Federal Reserve (Fed) will pivot away from its hawkish stance early next year continues to act as a tailwind for the Gold price.
• Chicago Fed President Austan Goolsbee said the central bank is not pre-committing to cutting interest rates soon and should not be bullied by what the market wants.
• Cleveland Fed President Loretta Mester noted on Monday that financial markets had got a little bit ahead of the central bank on when to expect interest rate cuts next year.
• The markets, however, have priced in a more than 60% chance that the Fed will cut rates as soon as March 2024 and a total of 140 basis points of rate reductions in 2024.
• The yield on the benchmark 10-year US government bond languishes below the 4% mark, with the US Dollar hovering just above a multi-month low touched last week.
• The global risk-on rally remains uninterrupted amid expectations of lower interest rates in the US, more stimulus from China and dovish Bank of Japan, capping the safe-haven metal.
• Traders now look to the US Consumer Confidence Index for some impetus later this Wednesday, though the focus remains on the release of the US PCE Price Index on Friday.

Technical Analysis: Gold price bulls now await a move beyond the $2,047-2,048 supply zone

From a technical perspective, some follow-through buying beyond the $2,047-2,048 region will be seen as a fresh trigger for bulls and set the stage for an extension of the post-FOMC rally from the 50-day Simple Moving Average (SMA). The Gold price might then accelerate the positive move towards the $2,072-2,073 intermediate resistance before aiming to reclaim the $2,100 round figure.

On the flip side, the $2,018-2,017 area now seems to have emerged as an immediate strong support, below which the Gold price could slide to the $2,000 psychological mark. A convincing break below the latter might prompt some technical selling and expose the 50-day SMA, currently pegged near the $1,989-1,988 zone. The subsequent downfall has the potential to drag the XAU/USD towards last week's swing low, around the $1,973 region, en route to the 200-day SMA, currently near the $1,957 zone.