Gold price hangs near weekly low, 50-day SMA holds the key for bulls

• A combination of factors exerts pressure on the Gold price for the fourth successive day.
• Signs of stability in the equity markets undermine the metal amid modest USD strength.
• Bets for a 50-bps Fed rate cut in September and geopolitical risks to limit further losses.

Gold price (XAU/USD) prolongs its recent pullback from the vicinity of the record high and drifts lower for the fourth straight day on Wednesday, although the downfall lacks bearish conviction. Global equity markets seem to have stabilized following the recent steep losses. This, along with a modest US Dollar (USD) strength, turns out to be a key factor exerting downward pressure on the precious metal.

Meanwhile, the incoming softer US macro data fueled concerns that the world's largest economy was slowing faster than initially expected. This comes on top of China's economic woes, which, along with escalating geopolitical tensions in the Middle East, might cap any optimism in the markets. Apart from this, dovish Federal Reserve (Fed) expectations could act as a tailwind for the non-yielding Gold price. 

Daily Digest Market Movers: Gold price is undermined by positive risk tone and rebounding US bond yields-led USD uptick

• A global sell-off in the equity markets – triggered by fears of the US tipping into recession – seems to have eased amid some bargain buying and exert some pressure on the safe-haven Gold price on Wednesday.
• The US Treasury bond yields build on the overnight advance, which was their biggest rise since early June – and lend support to the US Dollar, which is further seen undermining the non-yielding yellow metal.
• Government data released on Tuesday showed that the US trade deficit fell by 2.5%, to $73.1 billion in June from $75.0 billion in May owing to a 1.5% rise in exports of aircraft and US-produced oil and gas.
• The markets are pricing in a 100% chance that the Federal Reserve will start lowering borrowing costs at the upcoming policy meeting in September and a near 70% probability of a 50-basis-point rate cut. 
• This, in turn, should keep a lid on the US bond yields and the USD, which, along with geopolitical risks stemming from the ongoing conflicts in the Middle East, might act as a tailwind for the XAU/USD.
• Lebanese group Hezbollah launched a series of drone and rocket attacks against Israel on Tuesday in retaliation to Israel’s reported killings of a top Hezbollah commander and Hamas leader last week. 
• The market might now move into a typical pattern of consolidation in the absence of any relevant macro data from the US and await the next major fundamental catalyst before placing fresh directional bets.

Technical Analysis: Gold price needs to find acceptance below the 50-day SMA pivotal support for bears to seize control

From a technical perspective, any subsequent decline might continue to find some support near the 50-day Simple Moving Average (SMA), pegged near the $2,368-2,367 region. This is followed by last week's swing low, around the $2,353-2,352 zone and the $2,344 area, or the 100-day SMA. Sustained weakness below the latter will be seen as a fresh trigger for bearish traders and pave the way for deeper losses. Given that oscillators on the daily chart have just started gaining negative traction, the Gold price might then accelerate the downfall towards challenging the $2,300 round figure.

On the flip side, recovery back above the $2,400 mark is likely to face some resistance near the overnight swing high, around the $2,418 region. Some follow-through buying could lift the Gold price beyond the $2,430 barrier, towards the next relevant hurdle near the $2,448-2,450 horizontal zone. The momentum could extend further towards the $2,468-2,469 region en route to the all-time peak, near the $2,483-2,484 area touched in July. Bulls might then aim to conquer the $2,500 psychological mark, which if cleared decisively will set the stage for a further near-term appreciating move.