Gold price meets with a fresh supply on Tuesday amid some follow-through USD buying.
Fed Chair Powell’s speech eyed for some impetus ahead of FOMC minutes on Wednesday.
Gold price (XAU/USD) attracts fresh sellers during the Asian session on Tuesday and reverses the previous day's positive move back closer to the 50-day Simple Moving Average (SMA) pivotal resistance.
Apart from this, China's economic woes, geopolitical risks and political uncertainty could offer support to the Gold price.
Traders might also prefer to move to the sidelines ahead of Fed Chair Jerome Powell's speech later this Tuesday and the FOMC meeting minutes, due for release on Wednesday.
Gold price meets with a fresh supply on Tuesday amid some follow-through USD buying.
Rising bets for a September Fed rate cut should limit any further losses for the XAU/USD.
Fed Chair Powell’s speech eyed for some impetus ahead of FOMC minutes on Wednesday.
Gold price (XAU/USD) attracts fresh sellers during the Asian session on Tuesday and reverses the previous day's positive move back closer to the 50-day Simple Moving Average (SMA) pivotal resistance. As investors await more cues about the Federal Reserve's (Fed) rate-cut path, the US Dollar (USD) gains some follow-through traction and turns out to be a key factor exerting downward pressure on the commodity. Apart from this, a generally positive tone around the equity markets further contributes to driving flows away from the safe-haven precious metal.
The markets, meanwhile, have been pricing in a greater chance that the Fed will lower borrowing costs in September and cut rates again in December. The bets were lifted by the US ISM PMI released on Monday, which showed that the manufacturing sector contracted for the third straight month in June and prices paid by factories for inputs dropped to a six-month low. This, along with retreating US Treasury bond yields, might cap gains for the USD. Apart from this, China's economic woes, geopolitical risks and political uncertainty could offer support to the Gold price.
Traders might also prefer to move to the sidelines ahead of Fed Chair Jerome Powell's speech later this Tuesday and the FOMC meeting minutes, due for release on Wednesday. Furthermore, the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday might influence expectations about the Fed's future policy decision. This, in turn, will play a key role in driving the sentiment surrounding the Greenback and help in determining the next leg of a directional move for the Gold price.
Daily Digest Market Movers: Gold price remains depressed amid sustained USD buying, ahead of Powell's speech
Softer US macro data released on Monday reinforced expectations that the Federal Reserve will cut interest rates in September and again in December, prompting some intraday short-covering around the Gold price.
The Institute for Supply Management (ISM) said its Manufacturing PMI remained in contraction territory for the second straight month and edged lower from 48.7 to 48.5 in June, missing consensus estimates.
Additional details of the report showed that the Employment Index declined to 49.3 from 51.1 in May and the Prices Paid Index – the inflation component – retreated from 57 to 52.1 during the reported month.
This comes on top of the US PCE Price Index on Friday, which showed that inflation in May slowed to its lowest annual rate in more than three years and lifted bets for an imminent start of the Fed's rate-cutting cycle.
The US Treasuries sold off amid increasing odds of Donald Trump being elected as US President again later this year, which prompted some US Dollar short-covering and capped the upside for the XAU/USD.
Investors now look forward to Fed Chair Jerome Powell's speech later this Tuesday for some meaningful impetus ahead of the FOMC minutes on Wednesday and the US Nonfarm Payrolls report on Friday.
Meanwhile, Tuesday's US economic docket features the release of JOLTS Job Openings data, which might influence the USD price dynamics and further contribute to producing short-term trading opportunities.
Technical Analysis: Gold price could find some support near the overnight swing low ahead of $2,300 round figure
From a technical perspective, the Gold price, so far, has been struggling to make it through the 50-day Simple Moving Average (SMA) pivotal resistance. The said barrier is currently pegged near the $2,337-2,338 region and should act as a key pivotal point. A sustained strength beyond should pave the way for a move towards the next relevant hurdle near the $2,360-2,365 supply zone. Some follow-through buying should allow bulls to reclaim the $2,400 round-figure mark and aim towards challenging the all-time peak, around the $2,450 area touched in May.
On the flip side, weakness below the $2,319-2,318 area, or the overnight swing low, could find some support near the $2,300 mark ahead of the $2,285 horizontal zone. Failure to defend the said support levels will be seen as a fresh trigger for bearish traders and drag the Gold price to the 100-day SMA, currently near the $2,258 area. The downward trajectory could eventually drag the XAU/USD to the $2,225-2,220 region en route to the $2,200 round-figure mark.
