Gold extends the range play around 50-day SMA, modest USD strength caps the upside

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• Gold price extends its sideways consolidative price move during the Asian session. 
• Hawkish Fed expectations underpin the USD and act as a headwind for the metal.
• The downside seems limited ahead of the crucial US PCE Price Index on Thursday. 

Gold price (XAU/USD) continues with its struggle to gain any meaningful traction and remains confined in a familiar range around the 50-day Simple Moving Average (SMA) through the Asian session on Wednesday. Growing market conviction that the Federal Reserve (Fed) will wait until the June policy meeting before cutting interest rates helps revive the US Dollar (USD) demand and continues to act as a headwind for the non-yielding yellow metal. Apart from this, the recent risk-on rally across the global equity markets further seems to undermine the safe-haven commodity.

That said, the looming US government shutdown, along with a fresh leg down in the US Treasury bond yields, might hold back the USD bulls from placing aggressive bets and lend some support to the safe-haven Gold price. Investors might also prefer to move to the sidelines and look to the US Personal Consumption Expenditures (PCE) Price Index on Thursday for cues about the Fed’s rate-cut path. This might also contribute to limiting the downside for the XAU/USD, warranting caution before confirming that the recent recovery from a multi-month low has run its course.

Daily digest market movers: Gold price awaits fresh catalyst before the next leg of a directional move

• A combination of diverging forces fails to provide any meaningful impetus to the Gold price, which extends its consolidative price move in a nearly one-week-old trading range.
• The Federal Reserve’s higher-for-longer interest rates narrative lends some support to the US Dollar and continues to undermine the non-yielding yellow metal on Wednesday.
• A fresh leg down in the US bond yields, along with the looming US government shutdown and Tuesday’s disappointing release of US Durable Goods Orders, should cap the USD.
• US President Joe Biden emphasized the necessity of finding a solution to prevent a detrimental government shutdown on March 1 as a legislative logjam showed no signs of abating.
• The US Census Bureau reported that orders for long-lasting US manufactured goods experienced a larger-than-expected decline of 6.1% in January, the most in nearly four years.
• Meanwhile, the Conference Board’s Consumer Sentiment Index fell after three straight months of gains and came in at 106.7 for February, despite declining inflation expectations.
• The Richmond Fed’s Manufacturing Index recorded the fourth successive month of a negative reading, though improved to -5 in February as compared to  -15 in the previous month.
• Traders now look to the release of the Prelim US GDP print, which is expected to match the original estimates and show that the economy expanded by a 3.3% annualized pace in Q4.
• This, along with speeches by influential FOMC members, will play a key role in driving the USD demand and producing some meaningful trading opportunities around the XAU/USD.
• The focus, however, remains glued to the US Personal Consumption Expenditures Price Index on Thursday, which should provide fresh cues about the Fed’s rate-cut path.

Technical analysis: Gold price remains below $2,040-42 resistance zone, going no where in a hurry

From a technical perspective, the $2,041-2,042 area, or over a two-week high touched last Thursday, might continue to act as an immediate hurdle and cap gains for the Gold price. That said, a sustained strength beyond will confirm a break through the 50-day Simple Moving Average (SMA) barrier and pave the way for additional gains. Given that oscillators on the daily chart have just started gaining positive traction, the XAU/USD might then climb to the next relevant hurdle near the $2,065 region before aiming to reclaim the $2,100 round-figure mark.

On the flip side, the weekly trough. around the $2,025 region, now seems to protect the immediate downside ahead of the 100-day SMA, currently near the $2,011-2,010 area, and the $2,000 psychological mark. Some follow-through selling below the latter will shift the near-term bias back in favour of bearish traders and drag the Gold price to the $1,984 region en route to the very important 200-day SMA support near the $1,967 zone.