Gold price consolidates amid geopolitical risks, reduced bets for 50 bps Fed rate cut

• Gold price failed to build on the overnight positive move in the wake of the upbeat US data.
• Easing US recession fears boost investors’ confidence and contribute to capping the metal.
• Geopolitical risks and bets on an imminent start of the Fed’s rate-cutting cycle lend support.

Gold price (XAU/USD) attracted some dip-buying near the $2,432 area on Thursday and climbed over 1.5% intraday amid the risk of widening conflict in the Middle East. The precious metal, however, stalled the intraday move up near the $2,470 hurdle following the release of the upbeat US macro data, which eased fears of a recession in the world’s largest economy and dashed hopes for a more aggressive policy easing by the Federal Reserve (Fed). This, in turn, pushed the US Treasury bond yields and provided a goodish lift to the US Dollar (USD). Apart from this, the risk-on rally in the US equity markets contributed to capping gains for the commodity. 

Nevertheless, the Gold price settled with modest intraday gains, snapping a two-day losing streak, and held steady above the $2,450 level during the Asian session on Friday. Investors still seem convinced that the Fed will begin its rate-cutting cycle in September. This keeps a lid on any meaningful upside for the US bond yields and the USD, which, in turn, continues to act as a tailwind for the non-yielding yellow metal. Traders now look to the second-tier US macro data – Building Starts and Housing Permits, along with the Preliminary Michigan Consumer Sentiment Index – for short-term opportunities later during the early North American session. 

Daily Digest Market Movers: Gold price struggles to lure buyers amid mixed fundamental backdrop

• Persistent geopolitical tensions stemming from the ongoing conflicts in the Middle East and the protracted Russia-Ukraine war assisted the safe-haven Gold price to regain some positive traction on Thursday. 
• As a new round of Gaza ceasefire talks was underway in Doha, investors remained worried about how Iran would respond to the assassination of Hamas leader Ismail Haniyeh in Tehran last month. 
• Russia said on Thursday it would beef up border defenses, improve command and control and send in additional forces after Ukraine’s biggest attack on its sovereign territory since World War Two.
• The US macro data published on Thursday showed that Retail Sales rose more than expected in July and a still resilient labor market, easing fears of a sharp slowdown in the world’s biggest economy. 
• The US Census Bureau reported that the total value of sales at the retail level in the US rose 1% in July and sales ex-autos grew 0.4%, beating estimates for an increase of 0.3% and 0.1%, respectively. 
• Another report by the US Department of Labor (DOL) revealed that there were 227K initial jobless claims in the week ending August 10, better than the 235K expected and 234K in the previous week. 
• The markets were quick to react and are now pricing in a greater chance that the Federal Reserve will lower borrowing costs by just 25 basis points at its upcoming monetary policy meeting in September. 
• This, in turn, triggered a fresh leg up in the US Treasury bond yields and assisted the US Dollar in attracting some meaningful buying, which, in turn, capped the upside for the non-yielding yellow metal. 
• The XAU/USD remains on track to register modest weekly gains as the focus shifts to the FOMC minutes, due next Tuesday and Fed Chair Jerome Powell’s appearance at the Jackson Hole Symposium.

Technical Analysis: Gold price needs to break through the $2,470 barrier for bulls to seize control

From a technical perspective, the overnight failure near the $2,470 resistance makes it prudent to wait for some follow-through buying before positioning for any further gains. Given that oscillators on the daily chart are holding in positive territory, the Gold price might then aim to surpass the all-time peak, around the $2,483-$2,484 area touched in July, and conquer the $2,500 psychological mark. A sustained strength beyond the latter will confirm a breakout through a one-month-old broader trading range and could be seen as a fresh trigger for bullish traders, setting the stage for a further near-term appreciating move. 

On the flip side, the $2,447-2,445 horizontal zone now seems to protect the immediate downside ahead of the $2,430-2,429 area and the weekly low, around the $2,424 region. Some follow-through selling could make the Gold price vulnerable to weaken further below the $2,400 mark and test the 50-day Simple Moving Average (SMA) pivotal support, currently pegged near the $2,383 region. A convincing break below the latter might expose the 100-day SMA near the $2,363-2,362 area and the late July swing low, around the $2,353 zone. Failure to defend the said levels should pave the way for deeper losses.