Gold struggles to capitalize on modest intraday uptick amid Fed rate cut jitters – Crypto News

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• Gold price regains some positive traction amid geopolitical risks and subdued USD demand.
• The Fed’s hawkish outlook remains supportive of elevated US bond yields and caps gains.
• A sustained strength beyond the 50-day SMA is needed for bulls to seize near-term control.

Gold price (XAU/USD) trades with a mild positive bias during the Asian session on Friday, albeit lacks follow-through and remains below a nearly two-week high touched the previous day. The minutes of the late January FOMC meeting, along with the recent comments by influential Federal Reserve (Fed) officials, suggested that the central bank is in no hurry to cut interest rates. This remains supportive of elevated US Treasury bond yields, which, along with an extension of the risk-on rally across the global equity markets, turn out to be key factors acting as a headwind for the non-yielding yellow metal.

The downside for the safe-haven Gold price, however, remains cushioned amid the risk of a further escalation of geopolitical tensions in the Middle East. Moreover, the US Dollar (USD), so far, has been struggling to gain any meaningful traction despite the Fed’s hawkish outlook and could further lend support to the commodity in the absence of any relevant market-moving economic releases. Nevertheless, the XAU/USD seems poised to register modest gains for the first time in three weeks, though the aforementioned fundamental backdrop warrants some caution before placing aggressive bullish bets. 

Daily Digest Market Movers: Gold price is underpinned by a combination of factors, though lacks follow-through

• Israel intensified its bombardment on Gaza’s Rafah, while Yemen’s Iran-aligned Houthis rebels stepped up attacks on ships in the Red Sea, raising the risk of a wider war in the Middle East and underpinning the safe-haven Gold price.
• The US Dollar struggles to capitalize on the previous day’s goodish rebound from its lowest level in almost three weeks and lends additional support to the XAU/USD, though the Federal Reserve’s hawkish outlook might cap gains.
• Minutes of the latest FOMC policy meeting released on Wednesday pointed to a broad uncertainty about how long borrowing costs should remain at their current level to bring down inflation back to the central bank’s 2% target.
• Fed Vice Chair Philip Jefferson thinks that the central bank could begin to cut rates later this year, though said that he will be looking across a broad set of economic indicators for conviction that it is time to lower borrowing costs.
• Meanwhile, Philadelphia Fed President Patrick Harker noted that the central bank is getting close to cutting rates but a move in the near term is unlikely and emphasized that he doesn’t want to cut too early and re-ignite inflation.
• Separately, Fed Governor Lisa Cook noted that it is not yet time to reduce interest rates as the path towards the 2% inflation goal has been and could still be bumpy and uneven, citing the recent stronger consumer inflation figures.
• Furthermore, Fed Governor Christopher Waller said that policymakers should delay rate cuts by at least another couple more months to see if the hot inflation print in January was just a speed bump in the road towards price stability.
• As per the CME Group’s FedWatch Tool, the markets are pricing in around a 30% chance that the Fed will start cutting interest rates in May, while the odds for a move at the June FOMC policy meeting currently stand at about 66%.
• Data released on Thursday showed that the number of Americans applying for unemployment insurance benefits fell from 213K to 201K during the week ending February 17, offering fresh signs of strength in the labor market.
• The yield on the benchmark 10-year US government bond holds steady near its highest level since late November, acting as a tailwind for the Greenback and capping the non-yielding yellow metal amid the prevalent risk-on mood.
• The better-than-expected release of the flash Eurozone PMI prints suggested that the downturn in the business activity eased in February, which further boosts investors’ sentiment and should contribute to keeping a lid on the XAU/USD.

Technical Analysis: Gold price remains below the 50-day SMA pivotal hurdle, traders seem non-committed 

From a technical perspective, the 50-day SMA, currently pegged near the $2,032 area, followed by the $2,035 region, or a nearly two-week high touched on Thursday, could act as an immediate hurdle. Given that oscillators on the daily chart have just started gaining positive traction, a sustained strength beyond the said barrier has the potential to lift the Gold price towards the $2,044-2,045 intermediate resistance en route to the $2,065 supply zone.

On the flip side, the $2,020-2,019 area now seems to have emerged as an immediate support. This is followed by the 100-day SMA, around the $2,000 psychological mark, which if broken decisively will expose the monthly low, around the $1,984 region. The subsequent downfall could drag the Gold price further towards challenging the very important 200-day SMA support near the $1,966-1,965 zone.