Gold maintains a positive tone with the Dollar weighed down by Fed’s pivot

• Gold price keeps consolidating with the US Dollar depressed following the Fed’s dovish turn.
• US bond yields remain stuck at multi-month lows, adding negative pressure on the US Dollar.
• Later today, the US S&P Global PMIs and NY Empire State Manufacturing Index might give a fresh boost to Gold prices.

Gold price (XAU/USD) keeps its positive bias intact on Friday’s early European session and is on track to a 2% weekly rally, fuelled by the Federal Reserve’s (Fed) dovish pivot, which sent the US Dollar (USD) tumbling.

Thursday’s data from the US confirmed that the labor market remains strong, and retail sales increased, offering some support for the Dollar. That said, investors remain confident that the Fed will be the first bigger central bank to start easing its monetary policy, which is keeping US Dollar bulls at bay.

Later today, the US preliminary S&P Global PMIs and the NY Empire State Manufacturing Index are expected to endorse the view of softer economic growth. This would allow the Fed to start rolling back its restrictive policy in early 2024, which is bad for the USD and might push Gold a tad higher.

Daily Digest Market Movers: Gold remains strong as Hopes of Fed cuts hurt the US Dollar 

• Gold remains supported by a weak US Dollar, as hopes of Fed cuts have sent US Treasury yields plunging.
   
• The benchmark US 10-year yield is trading at four-month lows below 4%.
   
• The positive surprise on US retail sales and the larger-than-expected decline in Jobless claims provided some support to the US Dollar on Thursday.
   
• US Retail Sales rose by 0.3% in November against expectations of a 0.1% decline, and following a 0.2% fall in October.
   
• US Initial Jobless claims declined to 202K to their lowest level since mid-October.
   
• Investors keep pricing a nearly 70% chance of a 25 bps rate cut in March, according to the CME Group Fed Watch tool.
   
• The ECB and the BoE maintained their hawkish tone, pushing back hopes of rate cuts after their respective meetings, which leaves the Fed as the first major central bank to start cutting interest rates.
   
• On the calendar today, the Preliminary US ISM PMIs and the New York Fed Manufacturing Index are expected to show a mild deterioration from last month, which might give an additional boost to Gold. 

Technical Analysis: Gold is pushing against the $2,040 resistance area

From a technical perspective, Gold is regaining bullish impetus following a strong rebound from the $1,970 on Wednesday. The pair, however, needs to breach the $2,040 resistance area to confirm the bullish view.

Such a scenario is likely to attract buyers, with their focus on May’s peak at $2,070 before attempting another assault to the all-time high, at $2,150.

On the contrary, failure to break the mentioned level would see price seek support at $2.015 - $2,020 area where the confluence of the 50 and 100 SMAs in 4-hour charts meet the 50% Fibonacci Retracement of The October - December rally. Below here, bearish pressure would increase with the $1,977 support area coming into play.