Gold lacks any firm intraday direction amid mixed fundamental cues

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• Gold price is seen consolidating in a narrow trading band above the $2,000 mark on Friday.
• Rising US bond yields underpin the USD and cap the yellow metal amid a positive risk tone.
• Reviving bets for an early Fed rate cut and geopolitical risks lend support to the commodity.

Gold price (XAU/USD) struggles to capitalize on the overnight positive move and oscillates in a narrow range above the $2,000 psychological mark heading into the European session on Friday. The US Dollar (USD) attracts some buyers in the wake of a modest uptick in the US Treasury bond yields and for now, seems to have stalled a two-day corrective slide from a three-month peak, which, in turn, is seen acting as a headwind for the commodity. Apart from this, a generally positive tone around the equity markets contributes to capping the upside for the safe-haven precious metal.

The downside for the Gold price, however, remains cushioned in the wake of expectations that the Federal Reserve (Fed) will start cutting interest rates soon, bolstered by the weaker-than-anticipated US Retail Sales report released on Thursday. This might hold back the USD bulls from placing aggressive bets, which, along with geopolitical risks stemming from conflicts in the Middle East, should help limit losses for the non-yielding yellow metal. Market participants now look forward to the US macro data – the Producer Price Index (PPI), Housing Starts and Michigan Consumer Sentiment Index. 

The data, along with speeches by influential FOMC members, will drive the USD demand and provide a fresh impetus to the Gold price. Traders will further take cues from the broader risk sentiment to grab short-term opportunities around the metal. Nevertheless, the XAU/USD remains on track to register losses for the second successive week as the focus now shifts to next week’s release of the FOMC meeting minutes and the flash global PMIs on Wednesday and Thursday, respectively. 

Daily Digest Market Movers: Gold price struggles to lure buyers amid rising US bond yields, modest USD uptick

• A combination of diverging forces fails to assist the Gold price to capitalize on this week’s modest recovery from its lowest level since November 13.
• The yield on the benchmark 10-year US government bond holds above 4.0% and helps revive the USD demand, capping the upside for the XAU/USD.
• Thursday’s dismal US data lifts hopes for an early rate cut by the Federal Reserve and boosts investors’ confidence, further undermining the safe-haven metal.
• Bets for 25 basis points rate cut in May edged up to 40% and the odds for a move in June stood at 80% following the release of weaker US Retail Sales.
• The Commerce Department reported that Retail Sales declined sharply by 0.8% in January and sales excluding auto contracted by 0.6% last month.
• A separate report showed that import prices posted their biggest gain in nearly two years and jumped by 0.8% in January, the yearly rate fell 1.3%.
• Meanwhile, Jobless Claims declined by 8K from 220K in the previous week, to a one-month low level of 212K during the week ended February 10.
• Atlanta Fed President Bostic said on Thursday that the US central bank has made solid progress in lowering inflation and will soon contemplate cutting rates.
• Bostic added that a strong economy argues for patience in adjusting monetary policy and that the Fed does not face urgency to cut interest rates.
• The Israeli military said on Wednesday that its fighter jets began a series of strikes in Lebanon, raising the risk of a wider conflict in the Middle East.
• Traders now look to the US Producer Price Index for cues about the Fed’s future policy decision and rate-cut path, which might provide a fresh impetus.
• Friday’s US economic docket also features the release of Housing Starts and the Preliminary Michigan Consumer Sentiment Index for February.
• This, along with speeches by influential FOMC members, will drive the USD demand and produce short-term opportunities around the XAU/USD.

Technical Analysis: Gold price consolidates in a range, remains vulnerable while below the 50-day SMA

From a technical perspective, any subsequent move up is likely to confront some resistance near the $2,015 level. Some follow-through buying should allow the Gold price to test the 50-day SMA, currently around the $2,030 region. The latter should act as a key pivotal point, which if cleared decisively will set the stage for additional gains beyond the $2,044-2,045 intermediate hurdle, towards the $2,065 supply zone.

On the flip side, the 100-day SMA, currently around the $1,992-1,991 area, could act as immediate support ahead of the $1,984 region, or a two-month low touched on Wednesday. This is followed by the very important 200-day SMA, currently pegged near the $1,965 area, which if broken decisively will be seen as a fresh trigger for bearish trades. The Gold price might then accelerate the fall towards an intermediate support near the $1,952-1,950 zone en route to the November 2023 low, around the $1,932-1,931 region.