Gold price hangs near multi-month low, eyes US ADP report and ISM Services PMI

• Gold price remains on the defensive and well within the striking distance of a near seven-month trough.
• Hawkish Fed expectations, elevated US bond yields and a bullish USD continue to weigh on the metal.
• Investors now look to the US ADP report and ISM Services PMI for short-term trading opportunities.

Gold price (XAU/USD) dived to a near seven-month low on Tuesday and recorded losses for the seventh straight day – its longest losing streak since August 2022. The yellow metal found some support near the $1,815 region, though it struggled to gain any meaningful traction and remained on the defensive through the Asian session on Wednesday. The fundamental backdrop, meanwhile, seems tilted in favour of bearish traders and supports prospects for an extension of the recent downfall witnessed over the past two weeks or so.

Investors seem convinced that the Federal Reserve (Fed) will keep interest rates higher for longer, which, in turn, might continue to act as a headwind for the non-yielding Gold price. The expectations were reaffirmed by the Job Openings and Labor Turnover Survey, or JOLTS report, on Tuesday, which showed that job openings in the United States (US) unexpectedly rose in August amid a surge in demand for workers and pointed to a still-tight labour market. This comes on top of a rise in consumer spending and brings wage inflation back on the agenda.

This might force the Fed to stick to its hawkish stance and possibly extend the rate-hiking cycle into 2024. The outlook remains supportive of elevated US Treasury bond yields and continues to underpin the US Dollar (USD), suggesting that the path of least resistance for the Gold price is to the downside. That said, oversold conditions on the daily chart and the prevalent risk-off mood could limit losses for the safe-haven XAU/USD. Traders now look to the US ADP report and ISM Services PMI for some impetus ahead of the US NFP report on Friday.

Daily Digest Market Movers: Gold price continues to be undermined by hawkish Fed expectations

• Gold price struggles to register any recovery and languishes near a multi-month low in the wake of the Federal Reserve's hawkish view and higher-for-longer interest rates narrative.
• The recent comments by several Fed officials also backed the case for at least one more 25 basis points (bps) lift-off by the end of this year to bring inflation back to the 2% target.
• The monthly JOLTS report showed that there were an estimated 9.61 million open jobs in August, marking a sizeable uptick from the previous month's upwardly revised print of 8.92 million openings.
• This, along with persistently high inflationary pressures, could compel the Fed to stick to its hawkish stance and raise interest rates at its next monetary policy meeting in November.
• Republican Kevin McCarthy, who navigated legislation to keep the government running until November 17, becomes the first US House speaker to be removed from his job.
• The development exposes GOP infighting and sparks chaos ahead of the 2024 election, which, along with looming recession risks, continues to weigh on investors' sentiment.
• Traders now look to the ADP report, expected to show that the US private-sector employers added 153K jobs in September as compared to the 177K in the previous month.
• The US economic docket also features the ISM Service PMI, which is anticipated to ease from 54.5 to 53.6 in September and should provide some impetus to the XAU/USD.

Technical Analysis: Gold price could slide further towards testing the $1,800 mark

The Relative Strength Index (RSI) on the daily chart is flashing extremely oversold conditions and makes it prudent to wait for some near-term consolidation or a modest bounce before positioning for a further depreciating move. The lack of firm buying interest, meanwhile, suggests that the path of least resistance for the Gold price is to the downside. Hence, a slide below the $1,815 level, or a multi-month low set on Tuesday, leaning towards challenging the $1,800 round figure, looks like a distinct possibility. Some follow-through selling will expose the next relevant support near the $1,770-1,760 region. On the flip side, any recovery attempt might confront stiff resistance and remain capped near the $1,830-1,832 horizontal zone. A sustained strength beyond, however, might trigger a short-covering rally and lift the yellow metal to the $1,850 hurdle en route to the $1,858-1,860 strong barrier.