Gold price remains confined in a familiar range amid Fed rate cut uncertainty

• Gold price continues with its struggle to gain any meaningful traction on Friday.
• Reduced bets for an aggressive Fed policy easing cap the upside for the metal.
• Traders prefer to wait for next week’s US inflation data before placing fresh bets.

Gold price (XAU/USD) fails to build on the overnight bounce from the $2,020 region and oscillates in a familiar trading range during the Asian session on Friday. Growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer in the wake of a still resilient US economy continues to act as a headwind for the non-yielding yellow metal. Apart from this, the prevalent risk-on environment is seen as another factor capping the upside for the safe-haven commodity.

The downside for the Gold price, however, remains cushioned amid the uncertainty over the timing and the pace of rate cuts by the Fed in 2024. Despite the recent hawkish comments by several FOMC members, including Fed Chair Jerome Powell, investors are still pricing in five rate cuts over the course of the seven remaining FOMC policy meetings this year. This keeps the US Dollar (USD) bulls on the defensive below the highest level in almost three months and lends support to the XAU/USD.

Traders also seem reluctant to place aggressive directional bets and prefer to wait for next week's release of the US consumer inflation figures, which will play a key role in influencing the Fed's future policy decisions. This will play a key role in driving the USD demand in the near term and provide some meaningful impetus, which should allow the Gold price to break through a multi-week-old trading range. In the meantime, the XAU/USD could extend the range bound price action.

Daily Digest Market Movers: Gold price lacks firm near-term direction, awaits cues about Fed rate cut path

• Robust US macro data and hawkish comments by Federal Reserve officials force investors to scale back their bets for steep rate cuts this year, which continues to act as a headwind for the non-yielding Gold price.
• Fed Chair Jerome Powell said on Sunday that the central bank can be prudent in deciding when to start easing on the back of a strong economy, smashing any remaining hopes for an interest rate cut in March.
• Adding to this, Richmond Fed Thomas Barkin said on Thursday that the central bank has time to be patient on rate changes and that he needs to see good inflation numbers being sustained and broadening.
• This assists the yield on the benchmark 10-year US government bond to hold above 4.0% and undermines the XAU/USD, though subdued US Dollar price action lends support and helps limit the downside.
• Market participants now look to the US consumer inflation figures due next week for cues about the timing and the pace of rate cuts this year, which, in turn, should provide a fresh directional impetus to the metal.
• The commodity, meanwhile, remains on track to register modest weekly losses, though remains confined in a multi-week-old trading range held since the beginning of this year, warranting caution for aggressive traders.

Technical Analysis: Gold price lacks firm direction, remains confined in a multi-week-old trading range

From a technical perspective, the range bound price action points to indecision among traders over the near-term trajectory for the Gold price. Moreover, neutral oscillators on the daily chart warrant some caution before placing aggressive bets. In the meantime, the $2,022-2,020 area might continue to protect the immediate downside ahead of the weekly low, around the $2,015 region. Some follow-through selling will expose the $2,000 psychological mark, below which the Gold price could accelerate the slide towards the 100-day Simple Moving Average (SMA), currently around the $1,987 zone. The downfall could extend further towards the very important 200-day SMA, near the $1,966-1,965 region.

On the flip side, the weekly swing high, around the $2,044-2,045 area, is likely to act as an immediate barrier ahead of the $2,054-2,055 zone and the $2,065 region, or the monthly peak. A sustained strength beyond the latter has the potential to lift the Gold price back towards the YTD peak, near the $2,078-2,079 touched in January. The subsequent move-up should allow the XAU/USD to reclaim the $2,100 mark and climb further to the next relevant hurdle near the $2,120 region.