Gold remains on the defensive below 50-day SMA amid reviving USD demand – Crypto News

Share:

• Gold price remains confined in a narrow band heading into the European session. 
• Hawkish Fed expectations underpin the USD and act as a headwind for the metal.
• The downside seems limited ahead of the crucial US PCE Price Index on Thursday. 

Gold price (XAU/USD) extends its sideways consolidative price move around the 50-day Simple Moving Average (SMA) on Wednesday as traders await fresh catalyst before positioning for the next leg of a directional move. Hence, the focus remains glued to the US Personal Consumption Expenditures (PCE) Price Index on Thursday, which will provide cues about the Federal Reserve’s (Fed) rate-cut path and drive the non-yielding yellow metal.

In the meantime, the emergence of some US Dollar (USD) buying, bolstered by hawkish Federal Reserve (Fed) expectations, turns out to be a key factor acting as a headwind for the Gold price. Apart from this, the prevalent risk-on environment further contributes to capping the safe-haven precious metal. That said, a fresh leg down in the US Treasury bond yields might hold back the USD bulls from placing aggressive bets and lend some support to the XAU/USD. 

Traders now look to the release of the prelim US Q4 GDP print, due later during the early North American session. This, along with speeches by influential FOMC members, should provide some impetus to the Greenback and the Gold price. Apart from this, the broader risk sentiment might produce short-term trading opportunities. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before placing aggressive directional bets. 

Daily digest market movers: Gold price continues with its struggle to gain any meaningful traction

• A combination of diverging forces fails to provide any meaningful impetus to the Gold price, which extends its consolidative price move in a nearly one-week-old trading range.
• The Federal Reserve’s higher-for-longer interest rates narrative lends some support to the US Dollar and continues to undermine the non-yielding yellow metal on Wednesday.
• A fresh leg down in the US bond yields, along with the looming US government shutdown and Tuesday’s disappointing release of US Durable Goods Orders, should cap the USD.
• US President Joe Biden emphasized the necessity of finding a solution to prevent a detrimental government shutdown on March 1 as a legislative logjam showed no signs of abating.
• The US Census Bureau reported that orders for long-lasting US manufactured goods experienced a larger-than-expected decline of 6.1% in January, the most in nearly four years.
• Meanwhile, the Conference Board’s Consumer Sentiment Index fell after three straight months of gains and came in at 106.7 for February, despite declining inflation expectations.
• The Richmond Fed’s Manufacturing Index recorded the fourth successive month of a negative reading, though improved to -5 in February as compared to  -15 in the previous month.
• Traders now look to the release of the Prelim US GDP print, which is expected to match the original estimates and show that the economy expanded by a 3.3% annualized pace in Q4.
• This, along with speeches by influential FOMC members, will play a key role in driving the USD demand and producing some meaningful trading opportunities around the XAU/USD.
• The focus, however, remains glued to the US Personal Consumption Expenditures Price Index on Thursday, which should provide fresh cues about the Fed’s rate-cut path.

Technical analysis: Gold price oscillates in a range around 50-day SMA, seems vulnerablw while below $2,040-42

From a technical perspective, the $2,041-2,042 area, or over a two-week high touched last Thursday, might continue to act as an immediate hurdle and cap gains for the Gold price. That said, a sustained strength beyond will confirm a break through the 50-day Simple Moving Average (SMA) barrier and pave the way for additional gains. Given that oscillators on the daily chart have just started gaining positive traction, the XAU/USD might then climb to the next relevant hurdle near the $2,065 region before aiming to reclaim the $2,100 round-figure mark.

On the flip side, the weekly trough. around the $2,025 region, now seems to protect the immediate downside ahead of the 100-day SMA, currently near the $2,011-2,010 area, and the $2,000 psychological mark. Some follow-through selling below the latter will shift the near-term bias back in favour of bearish traders and drag the Gold price to the $1,984 region en route to the very important 200-day SMA support near the $1,967 zone.