Gold price trades with modest losses amid stronger USD; downside seems limited

• Gold price edges lower on Friday amid some follow-through US Dollar buying interest.
• The Fed’s projected three rate cuts in 2024 will likely cap the USD and limit losses for the metal.
• Traders look forward to Fed Chair Jerome Powell’s speech for short-term opportunities.

Gold price (XAU/USD) struggles to capitalize on the overnight late bounce from the 100-hour Simple Moving Average (SMA) support near the $2,166-2,165 area and edges lower during the Asian session on Friday. As investors looked past the Federal Reserve's (Fed) policy update on Wednesday, the US Dollar (USD) made a solid comeback in the wake of the optimism around the US economic growth. This, along with elevated US Treasury bond yields and the prevalent risk-on environment, are key factors exerting some downward pressure on the safe-haven precious metal.

The downside for the Gold price, however, seems cushioned amid a less restrictive policy stance by the Fed, signalling that it remains on track to cut interest rates by 75 basis points this year. The outlook keeps a lid on any further rise in the US bond yields, which might hold back the USD bulls from placing fresh bets and act as a tailwind for the non-yielding yellow metal. This makes it prudent to wait for strong follow-through selling before confirming that the XAU/USD has topped out in the near term as traders now look to Fed Chair Jerome Powell's scheduled speech for a fresh impetus.

Daily Digest Market Movers: Gold price is pressured by modest USD strength; Fed rate cut bets to lend support

• The US Dollar looks to build on the previous day's strong recovery from a one-week low touched in the aftermath of the FOMC decision and is seen undermining the Gold price on Friday.
• The Federal Reserve upgraded its economic growth projection and now sees real GDP to hit 2.1% by the end of this year as compared to the previous estimate of 1.4% in December.
• Moreover, policymakers raised the forecast for core inflation to 2.6% from 2.4% and now see the unemployment rate at 4% for 2024, slightly lower than the 4.1% previously projected.
• The outlook remains supportive of elevated US Treasury bond yields and is seen acting as a tailwind for the USD, though the projected less restrictive policy might cap the upside.
• On the economic data front, the US Department of Labor (DOL) reported on Thursday that Initial Jobless Claims fell to 210K in the week ending March 16 from the 212K previous.
• US Secretary of State Antony Blinken said that gaps are narrowing in the ongoing talks aimed at reaching a ceasefire in Gaza and the release of hostages, boosting investors' confidence.
• Fed Chair Jerome Powell's speech later during the early North American session will be looked for more cues about future policy decisions and provide a fresh impetus to the XAU/USD.

Technical Analysis: Gold price is likely to find decent support near the weekly swing low, around the $2,146 area

From a technical perspective, some follow-through selling below the overnight swing low, around the $2,166 area, or the 100-hour SMA, might expose the $2,146 support or the weekly trough. A convincing break below the latter could drag the Gold price further towards the next relevant support near the $2,128-2,127 zone en route to the $2,100 round figure.

On the flip side, the $2,200 psychological mark now seems to act as an immediate hurdle, above which bulls might aim to challenge the record high, around the $2,223 zone touched on Thursday. Meanwhile, the Relative Strength Index (RSI) on the daily chart – though has eased from higher levels – is still flashing overbought conditions and warrants caution.