News & Analyses

Gold flat lines below $2,200 mark as traders await US PCE Price Index on Friday

  • Gold price lacks any firm intraday direction and oscillates in a narrow trading range. 
  • The overnight hawkish remarks by Fed’s Waller act as a headwind for the XAU/USD.
  • The downside seems limited as traders await more cues about the Fed’s rate-cut path.

Gold price (XAU/USD) struggles to capitalize on its weekly gains registered over the past three days and oscillates in a narrow trading band below the $2,200 mark during the Asian session on Thursday. Traders now seem reluctant and opt to wait for more cues about the Federal Reserve’s (Fed) policy path before placing fresh directional bets, which, in turn, leads to subdued price action. Hence, the focus will remain glued to the release of the US Personal Consumption Expenditures (PCE) Price Index on Friday, which will drive the US Dollar (USD) demand and provide some meaningful impetus to the precious metal.

In the meantime, the overnight hawkish remarks by Federal Reserve (Fed) Governor Christopher Waller cooled rate cut hopes and might cap gains for the non-yielding Gold price. The US central bank, however, projected a less restrictive policy going forward and indicated that it remains on track to cut interest rates by 75 basis points in 2024. This is holding back the USD bulls from placing aggressive bets. Apart from this, a generally softer tone around the equity markets turns out to be another factor acting as a tailwind for the safe-haven XAU/USD and should continue to help limit any meaningful corrective slide. 

Daily Digest Market Movers: Gold price traders prefer to wait for more cues about Fed’s rate-cut path

  • Federal Reserve (Fed) Governor Christopher Waller said on Wednesday that he was in no hurry to cut rates in the wake of hotter inflation readings in recent months, boosting the US Dollar and capping gains for the Gold price.
  • Waller, however, noted that further expected progress on lowering inflation will make it appropriate for the Fed to start cutting interest rates later this year, which is seen acting as a tailwind for the non-yielding yellow metal.
  • Moreover, the Fed last week projected three interest rate cuts of 25 basis points each by the end of this year, and the markets are currently pricing in a greater chance of the first move at the June FOMC monetary policy meeting.
  • Apart from this, geopolitical risks stemming from the protracted Russia-Ukraine war and the ongoing conflicts in the Middle East should help limit any meaningful corrective decline for the safe-haven precious metal.
  • Traders now look to Thursday’s US economic docket – featuring the release of the final Q4 GDP print, the usual Weekly Initial Jobless Claims, Pending Home Sales and the revised Michigan Consumer Sentiment Index.

Technical Analysis: Gold price could retest recor high once the $2,200 barrier is taken out decisively

From a technical perspective, the range-bound price action witnessed over the past two weeks or so might be categorized as a bullish consolidation phase against the backdrop of a blowout rally since the beginning of this month. Moreover, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for an eventual breakout to the upside. Some follow-through buying back above the $2,200 mark will reaffirm the constructive setup and allow the Gold price to retest the record high, around the $2,223 region touched last week.

On the flip side, any corrective decline now seems to find some support near the overnight swing low, around the $2,173 area ahead of the $2,164-2,163 zone. This is followed by the lower end of the short-term trading range, around the $2,146-2,145 region, which, if broken, might prompt aggressive technical selling. The Gold price might then accelerate the fall to the next relevant support near the $2,128-2,127 region en route to the $2,100 round-figure mark. The latter should act as a strong base, which, if broken, will suggest that the XAU/USD has topped out in the near term.


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