Gold price eases from all-time high, downside seems limited ahead of Fed Chair Powell’s testimony

• Gold price ticks lower on Wednesday amid some profit-taking ahead of Fed Chair Powell’s statement.
• Rising bets for a June Fed rate cut undermine the USD and lend support to the metal.
• Geopolitical risks and China’s economic woes also act as a tailwind for the XAU/USD.

Gold price (XAU/USD) edges lower during the Asian session on Wednesday and reverses a part of the previous day's positive move back closer to the all-time high reached in December 2023. The downtick could be attributed to some profit-taking amid extremely overbought conditions on the daily chart and some repositioning trade ahead of the Federal Reserve (Fed) Chair Jerome Powell's congressional testimony. Investors will closely scrutinize Powell's remarks for fresh cues about the Fed's rate-cut path, which will play a key role in influencing the US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.

Apart from this, the release of the ADP report on private-sector employment and JOLTS Job Openings data might contribute to producing some meaningful trading opportunities around the Gold price ahead of the US Nonfarm Payrolls (NFP) on Friday. In the meantime, the growing market conviction that the Fed will start cutting interest rates at the June policy meeting might continue to act as a tailwind for the XAU/USD. This, along with concerns about a slowdown in China – the world's second-largest economy – and geopolitical tensions should help limit the downside for the safe-haven precious metal, warranting some caution for aggressive bearish traders.

Daily digest market movers: Gold price might continue to draw support from Fed rate cut bets, softer risk tone

• Weaker US economic data released on Tuesday reaffirmed market expectations that the Federal Reserve will cut interest rates sooner rather than later and lifted the Gold price back closer to the all-time peak.
• The Institute for Supply Management (ISM) reported that economic activity in the services sector expanded in February for the 14th consecutive month, albeit at a slower pace amid a decline in employment.
• Separately, data published by the US Commerce Department's Census Bureau showed that total Factory Orders fell by 3.6% MoM (-2.0% YoY) in January following a 0.3% decline in the previous month.
• Apart from this, persistent geopolitical tensions and China's economic woes tempered investors' appetite for riskier assets and further contributed to driving flows towards the perceived safe-haven precious metal.
• Bulls, meanwhile, opt to lighten their positions ahead of Fed Chair Jerome Powell's congressional testimony, which will offer clarity on the interest rate path and provide a fresh impetus to the XAU/USD.
• According to the CME Group's FedWatch tool, the markets are pricing in a 70% chance that the Fed will start cutting rates by June, keeping the US Dollar bulls on the defensive and limiting the downside for the commodity.
• Traders on Wednesday will further take cues from the release of the US ADP report on private-sector employment and JOLTS Job Openings data ahead of the closely-watched Nonfarm Payrolls report on Friday.

Technical analysis: Gold price might consolidate or witness a modest pullback amid an overbought RSI on the daily chart

From a technical perspective, the Relative Strength Index (RSI) on the daily chart is already flashing overstretched conditions and warrants some caution for bullish traders. Hence, it will be prudent to wait for some near-term consolidation or a modest pullback before positioning for any further near-term appreciating move for the Gold price.

That said, any corrective slide is likely to find decent support near the $2,100 round figure. Any further decline might still be seen as a buying opportunity and remain limited near the $2,064-2,062 strong horizontal resistance breakpoint. The latter should act as a key pivotal point, which if broken decisively will suggest that the XAU/USD has topped out and shift the near-term bias in favour of bearish traders.

On the flip side, the $2,142-2,144 area, or the all-time peak retested on Tuesday, could offer some resistance and cap the upside for the Gold price. Some follow-through buying will push the yellow metal to uncharted territory and pave the way for a further near-term appreciating move, possibly towards the $2,200 psychological mark.