Gold price seems vulnerable, traders keenly await US CPI and FOMC policy decision

• Gold price struggles to capitalize on its modest gains registered over the past two days.
• Diminishing odds for a September Fed rate cut underpin the USD and act as a headwind.
• Investors now look to the US CPI and FOMC policy decision for a fresh directional impetus.

Gold price (XAU/USD) showed some resilience below the $2,300 mark and posted modest gains for the second straight day on Tuesday. The uptick, however, lacks bullish conviction as traders keenly await the release of the latest consumer inflation figures from the United States (US) and the outcome of the highly-anticipated Federal Open Market Committee (FOMC) meeting later this Wednesday. This should provide fresh cues about the likely timing when the Federal Reserve (Fed) will start cutting interest rates, which, in turn, will play a key role in influencing the next leg of a directional move for the non-yielding yellow metal.

Heading into the key data/event risks, growing acceptance that the Fed will keep rates higher for longer amid a strong US labor market and sticky inflation continues to act as a headwind for the Gold price. The hawkish outlook, meanwhile, assists the US Dollar (USD) to stand tall near a one-month peak, which, in turn, is seen as another factor that contributes to capping the upside for the XAU/USD. The downside, however, seems cushioned in the wake of political uncertainty in Europe and persistent geopolitical tensions, warranting caution before positioning for an extension of the recent pullback from the all-time peak. 

Daily Digest Market Movers: Gold price bulls remain on the sidelines amid hawkish Fed expectations

• Reduced bets for an imminent interest rate cut by the Federal Reserve in September, along with China's decision to pause buying, turn out to be key factors capping the upside for the Gold price. 
• The current market pricing indicates that the Fed could cut rates by only 25 basis points this year, either at the November or December policy meeting, which continues to underpin the US Dollar.
• The USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near its highest level since May 9 and contributes to keeping a lid on the Dollar-denominated commodity.
• Traders, however, now seem reluctant and prefer to wait for more cues about the likely timing when the Fed will start cutting interest rates before placing fresh directional bets around the XAU/USD.
• Hence, the focus will remain glued to Wednesday's release of the latest US consumer inflation figures and the crucial FOMC monetary policy decision, due to be announced later during the US session.
• Stronger jobs and wage data released on Friday raised concerns that inflation may remain sticky amid a still resilient US economy, which, in turn, will reaffirm higher for longer interest rates narrative. 
• The headline US Consumer Price Index is expected to ease to 0.1% in May from the 0.3% previous, and the yearly rate is seen unchanged at 3.4%, still well above the Fed's annualized target of 2%. 
• Moreover, Core CPI is anticipated to hold steady at 0.3% during the reported month and edge lower to the 3.5% YoY rate from 3.6% in April, reaffirming stubbornly high inflationary pressure. 
• Meanwhile, the US central bank is expected to leave interest rates unchanged and release updated economic projections, including the so-called "dot plot", which will influence the precious metal.

Technical Analysis: Gold price needs to break below $2,285 support for bears to seize control

From a technical perspective, the $2,300 round figure now seems to act as immediate support ahead of the $2,285 horizontal zone. Against the backdrop of Friday's breakdown below the 50-day Simple Moving Average (SMA), some follow-through selling below the latter will be seen as a fresh trigger for bearish traders. Given that oscillators on the daily chart are holding in the negative territory, the Gold price might then accelerate the slide towards the next relevant support near the $2,254-2,253 region. The downward trajectory could extend further towards the $2,225-2,220 area en route to the $2,200 mark.

On the flip side, any strength beyond the $2,325 hurdle is more likely to attract fresh sellers and remain capped near the 50-day SMA support breakpoint, currently pegged near the $2,345 region. This is followed by the $2,360-2,362 supply zone, which, if cleared decisively, should allow the Gold price to retest last week’s swing high, around the $2,387-2,388 area and reclaim the $2,400 mark. A sustained strength beyond the latter will negate any near-term negative bias and pave the way for a further appreciating move in the near term.