Gold price trades with modest gains as traders look to US macro data, FOMC minutes

Gold price (Yellow Metal) retreated over $20 intraday and finally settled in the red for the third successive day on Tuesday, albeit lacking follow-through selling. Expectations the Federal Reserve (Fed) will ease its monetary policy this year, along with concerns about fragile economic recovery in China and geopolitical risks, continue to act as a tailwind for the precious metal. Apart from this, subdued US Dollar (USD) price action and the cautious market mood assist the safe-haven commodity to attract some buyers during the Asian session on Wednesday.

That said, doubts over early interest rate cuts by the Fed, which led to the overnight sharp move higher in the US Treasury bond yields, act as a headwind for the non-yielding Gold price. Traders might also refrain from placing aggressive bullish bets ahead of the FOMC meeting minutes, which could offer more clarity on the Fed’s next policy moves and drive the USD demand in the near term. In the meantime, the US macro data – ISM Manufacturing PMI and JOLTS Job Openings data – will be looked upon for short-term trading opportunities.

Daily Digest Market Movers: Gold price edges higher ahead of FOMC meeting minutes

  • A combination of supporting factors assists the Gold price to regain positive traction on Wednesday and snap a three-day losing streak.
  • Bets that the Federal Reserve will cut interest rates in March turn out to be a key factor lending support to the non-yielding yellow metal.
  • The possibility of a further escalation of conflict in the Red Sea, along with China’s economic woes, also acts as a tailwind for the safe-haven metal.
  • The official Chinese PMI released over the weekend indicated a further deterioration in manufacturing activity and little signs of recovery at the end of 2023.
  • A private survey showed on Tuesday that China’s factory activity expanded at a quicker pace in December but business confidence for 2024 remained subdued.
  • The US Dollar consolidates the overnight strong gains to a more than one-week top, helped by a sharp rise in the US bond yields, and caps the commodity.
  • Traders might also prefer to wait on the sidelines ahead of the US ISM Manufacturing PMI, JOLTS Job Openings data and the crucial FOMC meeting minutes.

Technical Analysis: Gold price might continue to confront stiff resistance near $2,078 region

From a technical perspective, the overnight failure near the all-time high closing, around the $2,077-2,078 region, and the subsequent slide warrants caution for bullish traders. The said hurdle should now act as a key pivotal point, which if cleared decisively will set the stage for a move towards reclaiming the $2,100 round-figure mark. Meanwhile, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for the emergence of some dip-buying at lower levels.

The overnight low, around the $2,055 area, now seems to protect the immediate downside ahead of the $2,040 horizontal zone. A convincing break below the latter might turn the Gold price vulnerable to accelerate the downfall further towards the $2,020 intermediate support en route to the 50-day Simple Moving Average (SMA), currently near the $2,008-2,007 region, and the $2,000 psychological mark. Some follow-through selling will expose the $1,960 confluence, comprising the 100- and the 200-day SMAs.

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