Gold price hangs near weekly low, bears await a sustained break below 50-day SMA

• Gold price languishes near the weekly low amid the underlying bullish tone around the USD.
• Reduced bets for a March Fed rate cut push the US bond yields higher and underpin the buck.
• The geopolitical risks and China’s economic woes could limit losses for the safe-haven metal.

Gold price (XAU/USD) struggles to gain any meaningful traction during the Asian session on Wednesday and consolidates the previous day's downfall to the weekly low. Investors further scaled back their expectations for an early interest rate cut by the US central bank in reaction to Federal Reserve (Fed) Christopher Waller's remarks on Tuesday. This, in turn, remains supportive of elevated US Treasury bond yields, which assists the US Dollar (USD) to stand tall near its highest level since December 13 and is seen acting as a headwind for the non-yielding yellow metal.

That said, an escalation of military action in the Middle East, along with persistent worries about slowing growth in China, helps limit the downside for the safe-haven Gold price. Moreover, the precious metal, so far, has managed to hold above the 50-day Simple Moving Average (SMA) support and the monthly trough touched last Thursday. This, in turn, warrants some caution for bearish traders and before positioning for deeper losses. Traders now look to the US macro data and speeches by influential FOMC members for some impetus later during the North American session.

Daily Digest Market Movers: Gold price is undermined by receding bets for an early Fed rate cut and a bullish USD

• Federal Reserve (Fed) Governor Christopher Waller's remarks on Tuesday further tempered expectations for a March rate cut and act as a headwind for the non-yielding Gold price.
• Waller added that the Fed needs to be cautious and cannot rush into rate cuts as the economy remains in good shape, pushing the US Treasury bond yields sharply higher.
• The yield on the benchmark 10-year US government bond holds steady above the 4.0% threshold, underpinning the US Dollar and capping the non-yielding yellow metal.
• The risk of a further escalation of tensions in the Middle East does little to provide any respite to the safe-haven XAU/USD or impress bullish traders.
• In the latest development, the US carried out another airstrike targeting a Houthi missile facility in Yemen, noting a threat to merchant vessels and US Navy ships.
• The official data released by the National Bureau of Statistics (NBS) showed that China’s economy grew at an annual rate of 5.2% in the final quarter of 2023.
• On a quarterly basis, Chinese GDP expanded by 1.0% in Q3 vs. 1.0% expected, while December Retail Sales and Industrial Production rose by 7.4% YoY and 6.8% YoY, respectively.
• Following the release of the high-impact data, the NBS noted that China's economy faces a complex external environment and low consumer prices reflect insufficient domestic demand.
• The geopolitical risks, along with China's economic woes, might hold back traders from placing aggressive bearish bets around the metal and help limit any further losses.
• Traders now look to the US macro data, which is expected to show that monthly Retail Sales grew by 0.4% in December and Industrial Production remained flat.
• Apart from this, scheduled speeches by Fed Governors Michael Barr and Michelle Bowman might influence the USD and provide some impetus to the commodity.

Technical Analysis: Gold price needs to break through the 50-day SMA support for bears to seize near-term control

From a technical perspective, the 50-day SMA, currently around the $2,017 area, followed by the $2,013 region, or the monthly low, could protect the immediate downside ahead of the $2,000 psychological mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and drag the Gold price towards the December swing low, around the $1,973 zone. The XAU/USD could eventually drop to the $1,969-1,963 confluence, comprising the 100- and 200-day SMAs.

On the flip side, the $2,040-2,045 region now seems to act as an immediate strong barrier ahead of the $2,061-2,062 supply zone. Some follow-through buying has the potential to lift the Gold price further towards the $2,077 area, which if cleared decisively will negate any near-term negative bias. Bullish traders might then aim towards reclaiming the $2,100 psychological mark.