Gold price struggles to attract any meaningful buying as traders await US PCE Price Index

• Gold price attracts some buyers for the second straight day amid sliding US bond yields.
• Geopolitical risks and the uncertain global economic outlook further benefit the metal.
• Delayed Fed rate cut bets could cap gains ahead of the release of the US PCE Price Index.

Gold price (XAU/USD) ticks higher for the second straight day on Friday, albeit with a lack of follow-through buying and trades below the $2,025 level during the Asian session. The stronger-than-expected economic growth figures released from the United States (US) on Thursday, along with signs of slowing inflation, improved prospects for a soft landing and dragged the US Treasury bond yields lower. This, in turn, keeps the US Dollar (USD) below its highest level since December 13 touched earlier this week and acts as a tailwind for the non-yielding yellow metal.

Apart from this, geopolitical risks stemming from conflicts in the Middle East, along with the uncertain global economic outlook, turn out to be another factor lending some support to the safe-haven Gold price. That said, reduced bets for an early interest rate cut by the Federal Reserve and a more aggressive policy easing in 2024 should help limit the downside for the Greenback. This, in turn, warrants caution before placing bullish bets around the precious metal and positioning for any appreciating move ahead of the US Personal Consumption Expenditures (PCE) Price Index.

The crucial US inflation data will be looked upon for cues about the Fed's future policy decisions. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the US Dollar-denominated Gold price. The market attention will then shift to the highly-anticipated two-day FOMC monetary policy meeting on January 30-31. Heading into the key central bank event risk, the XAU/USD seems poised to end in the red for the second straight week, also marking the third week of losses in the previous four.

Daily Digest Market Movers: Gold price benefits from sliding US bond yields, geopolitical risks ahead of US inflation data

• The benchmark 10-year US Treasury yield retreats further from over a one-month high touched last week and lends support to the Gold price for the second straight day on Friday.
• Data released on Thursday showed that the US economy expanded at an annual rate of 3.3% during the fourth quarter of 2023, beating consensus estimates for a reading of 2.0%.
• Further details of the report indicated that the core PCE Price Index was unchanged during the September-December period, suggesting that inflation pressures are receding.
• This validated the view that the world's largest economy is more likely to avoid a recession and overshadowed a rise in the US Weekly Initial Jobless Claims, to 214K last week.
• Separately, the US Census Bureau reported that US Durable Goods Orders were flat in December, while new orders excluding transportation and defense increased 0.3%.
• Investors remain worried that the Israeli-Hamas war could trigger a broader regional conflict as multiple nations and armed groups continue targeting each other’s territories.
• Adding to this, economists expect the global economy to weaken in 2024, which, in turn, is seen as another factor acting as a tailwind for the safe-haven precious metal.
• Market participants, meanwhile, remain uncertain over the timing of when the Federal Reserve will start lowering borrowing costs amid a still-resilient domestic economy.
• Traders now look to the US Personal Consumption Expenditures Price Index for cues about the Fed's future policy decisions and determine the near-term trajectory for the XAU/USD.

Technical Analysis: Gold price needs to break through the $2,040-2,042 supply zone for bulls to seize near-term control

From a technical perspective, any subsequent move up might continue to confront stiff resistance near the $2,040-2,042 supply zone. Some follow-through buying, however, might trigger a short-covering rally and lift the Gold price further to the $2,077 intermediate hurdle en route to the $2,100 round-figure mark.

On the flip side, the weekly low, around the $2,011 area, could offer some support ahead of the $2,000 psychological mark. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pave the way for a slide to the 100-day Simple Moving Average (SMA), currently around the $1,975-1,976 area. The Gold price could eventually drop to test the very important 200-day SMA, near the $1,964-1,963 region.