Gold price languishes near two-week low, seems vulnerable below $2,300 mark

• Gold price struggles to register any meaningful recovery from a two-week low set on Wednesday.
• The Fed’s hawkish stance, higher US bond yields, and recent USD strength have acted as a headwind.
• Geopolitical tensions and political uncertainty help limit the downside for the safe-haven metal.

Gold price (XAU/USD) oscillates in a range just below the $2,300 mark during the Asian session on Thursday and consolidates its recent losses to a nearly two-week low touched the previous day. The Federal Reserve (Fed) adopted a more hawkish stance and projected only one interest rate cut in 2024 at the end of the June policy meeting. Adding to this, the recent comments from a slew of influential FOMC members suggested that the central bank is unlikely to kickstart its rate-cutting cycle anytime soon. The hawkish outlook lifts the US Treasury bond yields to over a two-week high and the US Dollar (USD) to its highest level since early May, which, in turn, is seen acting as a headwind for the non-yielding yellow metal.

Apart from this, the underlying bullish tone across the global equity markets suggests that the path of least resistance for the safe-haven Gold price is to the downside. That said, the markets are still pricing in the possibility of two rate cuts by the Fed this year in the wake of signs that inflation in the US is subsiding. This, along with persistent geopolitical tensions and political uncertainty, lends some support to the XAU/USD. Bears also seem reluctant to place aggressive bets and prefer to wait for the release of the crucial US Personal Consumption Expenditures (PCE) Price Index on Friday. In the meantime, Thursday’s US economic docket might produce short-term opportunities later during the North American session. 

Daily Digest Market Movers: Gold price is undermined by higher US bond yields and a stronger USD

• The Federal Reserve’s higher-for-longer interest rates narrative remains supportive of elevated US Treasury bond yields and a bullish US Dollar, which undermines the non-yielding Gold price.
• A government report published on Wednesday showed that New Home Sales registered the steepest decline since September 2022 and plunged 11.3% in May to 619K, or the lowest level since November.
• The USD bulls, however, seem rather unaffected by the data, which added to the evidence that the world’s largest economy is slowing down amid the recent signs of easing inflationary pressures. 
• The Fed projected only one rate cut in 2024, though the markets are still pricing in a greater chance of the first rate cut by the Fed in September and about two 25 basis points cuts by the year-end. 
• The uncertainty over the likely timing and the number of Fed rate cuts this year keeps a lid on any further USD appreciation and lends support to the XAU/USD amid persistent geopolitical tensions.
• Traders also seem reluctant ahead of the US presidential debate and the release of the US Personal Consumption Expenditures (PCE) Price Index – the Fed’s preferred inflation gauge – on Friday.
• Heading into the key data risk, Thursday’s US macro data – the final Q1 GDP print, Durable Goods Orders, Initial Weekly Jobless Claims, and Pending Home Sales – might provide some impetus.

Technical Analysis: Gold price could accelerate the fall once the $2,285 horizontal support is broken

From a technical perspective, the recent failure to build on the momentum beyond the 50-day Simple Moving Average (SMA) and the subsequent downfall favors bearish traders. Moreover, the overnight breakdown through a short-term ascending trend-line support near the $2,314 area validates the near-term negative outlook. Given that oscillators on the daily chart have been gaining negative traction, some follow-through selling below the $2,285 horizontal support has the potential to drag the Gold price to the 100-day SMA support near the $2,250 area. The downward trajectory could extend further towards the $2,225-2,220 region before the XAU/USD eventually drops to the $2,200 round-figure mark.

On the flip side, any attempted recovery now seems to face resistance near the $2,314-2,315 support breakpoint. A sustained strength beyond might trigger a short-covering rally, though is likely to remain capped near the 50-day SMA, currently pegged near the $2,338-2,340 region. The subsequent move-up could lift the Gold price back to the $2,360-2,365 supply zone, which, if cleared decisively, will negate any near-term negative bias. Bullish traders might then aim to reclaim the $2,400 round-figure mark and challenge the all-time peak, around the $2,450 area touched in May.