Gold price trades with negative bias around $2,725, remains confined in weekly range

• Gold price attracts fresh sellers on Friday and is pressured by a modest USD uptick.
• Bets for smaller Fed rate cuts benefit the USD and exert pressure on the XAU/USD.
• Geopolitical risks and the US political uncertainty might lend support to the metal.

Gold price (XAU/USD) drifts lower during the Asian session on Friday and reverses a part of the previous day's positive move, though it remains confined in the weekly range. With less than two weeks before the November 5 US presidential election, opinion polls point to a tight race to the White House. This adds to a layer of political uncertainty, which, along with Middle East tensions, might continue to act as a tailwind for the safe-haven precious metal.

The supporting factor, to a larger extent, is offset by the emergence of some US Dollar (USD) dip-buying, bolstered by firming expectations for a less aggressive policy easing by the Federal Reserve (Fed). In fact, traders have fully priced out the possibility of another jumbo rate cut in November as the recent US macro data suggested that the economy remains on strong footing. This, in turn, is seen underpinning the buck and weighing on the non-yielding Gold price. 

Daily Digest Market Movers: Gold price drifts lower despite Middle East tensions, US political uncertainty

• The US Dollar stalls the overnight retracement slide from a nearly three-month top amid bets for smaller rate cuts by the Federal Reserve and prompts fresh selling around the Gold price on Friday. 
• Traders no longer expect another oversized interest rate cut by the Fed at its November monetary policy meeting as the incoming US macro data suggested that the economy remains on strong footing. 
• This, along with deficit-spending concerns after the US presidential election, led to a sell-off in the US bond market and lifted the benchmark 10-year Treasury yield to a three-month top on Wednesday.
• The latest poll shows a tight race between Vice President Kamala Harris and the Republican nominee Donald Trump, which, along with geopolitical risks, could offer support to the safe-haven XAU/USD.
• Israel continued with its military assault on Iranian-backed Hezbollah in Lebanon and intensified a siege on northern parts of Gaza, raising the risk of a further escalation of tensions in the Middle East. 
• Traders now look to Friday's US economic docket – featuring the release of Durable Goods Orders and the revised Michigan Consumer Sentiment Index – for short-term impetus heading into the weekend.

Technical Outlook: Gold price seems to be forming a bearish head-and-shoulders pattern on the 4-hour chart

From a technical perspective, the recent price action over the past week or so constitutes the formation of a bearish head and shoulders pattern on short-term charts. The neckline support of the said pattern is pegged near the $2,705 region, which should now act as an immediate strong support. Some follow-through selling, leading to a subsequent fall below the $2,700 mark, should pave the way for deeper losses and drag the Gold price further towards the $2,675 support. The downfall could extend further towards the bearish pattern target near the $2,660 area.

On the flip side, the $2,640-2,645 region now seems to have emerged as an immediate strong barrier. Meanwhile, a sustained strength beyond will negate the head-and-shoulders pattern and allow the Gold price to aim towards challenging the all-time peak, around the $2,658-2,659 area touched earlier this week. The subsequent move up could lift the XAU/USD towards the $2,770 zone, representing a nearly four-month-old ascending trend-line resistance, en route to the $2,800 round-figure mark.