Gold price (XAU/USD) struggles to gain any meaningful traction and extends its sideways consolidative price move through the first half of the European session on Tuesday.
A slew of influential Federal Reserve (Fed) officials recently downplayed market expectations about an imminent shift in the US central bank's policy stance and attempted to push back bets for early rate cuts in 2024. This, along with the post-Bank of Japan (BoJ) heavy selling around the Japanese Yen (JPY), helps revive the US Dollar (USD) demand and acts as a headwind for the non-yielding yellow metal.
Apart from this, the robust risk-on sentiment pervading across the global equity markets, with US stock indices ending close to the record high on Monday, further contributes to capping the upside for the safe-haven Gold price. Investors, meanwhile, remain concerned about geopolitical risks linked to the conflict in the Middle East and a global economic downturn, particularly in China and the Eurozone. This, in turn, continues to lend some support to the safe-haven XAU/USD. Traders also seem reluctant to place aggressive bets ahead of a key US inflation reading, due on Friday.
The US Core Personal Consumption Expenditure (PCE) Price Index will be looked upon for fresh clues about the Fed's future policy decisions, which, in turn, will drive the USD demand and provide a fresh directional impetus to the Gold price. In the meantime, traders on Tuesday will take cues from the US housing market data – Building Permits and Housing Starts. Apart from this, a scheduled speech by Richmond Fed President Thomas Barkin might influence the XAU/USD and produce short-term opportunities later during the North American session.
Daily Digest Market Movers: Gold price continues with its struggle to gain any meaningful traction
• Chicago Federal Reserve President Austan Goolsbee, along with Cleveland Fed President Loretta Mester, pushed back against market bets on interest rate cuts on Monday.
• Goolsbee said that he was confused over the market reaction to last week's FOMC meeting and that the central bank is not precommiting to cutting rates soon and swiftly.
• Separately, Cleveland Fed President Loretta Mester noted that financial markets had gotten a little bit ahead of the central bank on when to expect interest rate cuts next year.
• This comes on the back of New York Fed President John Williams's remarks on Friday that it was premature to speculate about rate cuts and caps the upside for the Gold price.
• The markets, however, seem convinced that the Fed will pivot to easing by the first half of 2024, which continues to undermine the US Dollar and lends support to the metal.
• Concerns over geopolitical risks linked to the conflict in the Middle East should further contribute to limiting any meaningful downfall for the safe-haven precious metal.
• Yemen's Iran-aligned Houthi militants launched a series of drone and missile attacks on ships in the southern Red Sea, which it says are a response to Israel's assault on the Gaza Strip.
• US Defence Secretary Lloyd Austin announced the formation of a multinational coalition and the launch of Operation Prosperity Guardian to address the Houthi threat in the Red Sea.
• Investors now look forward to the US Core Personal Consumption Expenditure (PCE) Price Index on Friday for clues about the Fed's future policy decisions.
Technical Analysis: Gold price bulls need to wait for a move beyond the $2,040 barrier
From a technical perspective, the Gold price needs to find acceptance above the $2,040 supply zone for bulls to seize near-term control. This is followed by last week's swing high, around the $2,049-2,050 region, which if cleared will set the stage for a move towards the next relevant barrier near the $2,072-2,073 area. The upward trajectory could get extended further and allow the XAU/USD to reclaim the $2,100 round-figure mark.
On the flip side, the $2,015 area might continue to protect the immediate downside ahead of the 2,010 horizontal resistance breakpoint and the $2,000 psychological mark. A convincing break below the latter will make the Gold price vulnerable to challenge the 50-day Simple Moving Average (SMA) support, currently pegged near the $1,985 level before dropping to last week's swing low, around the $1,973 area. Bears might then aim to test the 200-day SMA, near the $1,956 zone.
US Dollar price today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Australian Dollar.
Source FX Street
BDST: 1822 HRS, DEC 19, 2023
MSK
