Gold price languishes near daily low amid modest USD strength, ahead of Powell’s speech

• Gold price meets with a fresh supply on Tuesday amid some follow-through USD buying.
• Rising bets for a September Fed rate cut should limit any further losses for the XAU/USD.
• Fed Chair Powell’s speech eyed for some impetus ahead of FOMC minutes on Wednesday.

Gold price (XAU/USD) struggles to capitalize on the previous day’s modest gains to the 50-day Simple Moving Average (SMA) pivotal resistance and attracts fresh sellers during the Asian session on Tuesday. The US Dollar (USD) gains some follow-through traction as traders keenly await more cues about the Federal Reserve’s (Fed) rate-cut path, which, in turn, undermines the commodity. Apart from this, a generally positive tone around the equity markets is seen as another factor exerting downward pressure on the safe-haven precious metal. 

Any meaningful downside for the Gold price, however, still seems elusive in the wake of growing acceptance that the Fed will begin its rate-cutting cycle in September. The bets were lifted by the US ISM PMI released on Monday, which showed that the manufacturing sector contracted for the third straight month in June and prices paid by factories for inputs dropped to a six-month low. Apart from this, China’s economic woes, persistent geopolitical tensions, along with political uncertainty in the US and Europe, could offer some support to the safe-haven XAU/USD.

Traders might also prefer to wait on the sidelines ahead of Fed Chair Jerome Powell’s speech later this Tuesday and the FOMC meeting minutes, due for release on Wednesday. Furthermore, the closely-watched US monthly employment details, popularly known as the Nonfarm Payrolls (NFP) report on Friday might influence expectations about the Fed’s future policy decision. This, in turn, will play a key role in driving the sentiment surrounding the Greenback and determine the next leg of a directional move for the Gold price. 

Daily Digest Market Movers: Gold price drifts lower amid stronger USD as traders await more Fed rate cut cues

• Softer US macro data released on Monday reinforced expectations that the Federal Reserve will cut interest rates in September and again in December, prompting some intraday short-covering around the Gold price.
• The Institute for Supply Management (ISM) said its Manufacturing PMI remained in contraction territory for the second straight month and edged lower from 48.7 to 48.5 in June, missing consensus estimates.
• Additional details of the report showed that the Employment Index declined to 49.3 from 51.1 in May and the Prices Paid Index – the inflation component – retreated from 57 to 52.1 during the reported month.
• This comes on top of the US PCE Price Index on Friday, which showed that inflation in May slowed to its lowest annual rate in more than three years and lifted bets for an imminent start of the Fed’s rate-cutting cycle.
• The US Treasuries sold off amid increasing odds of Donald Trump being elected as US President again later this year, which prompted some US Dollar short-covering and capped the upside for the XAU/USD.
• Investors now look forward to Fed Chair Jerome Powell’s speech later this Tuesday for some meaningful impetus ahead of the FOMC minutes on Wednesday and the US Nonfarm Payrolls report on Friday.
• Meanwhile, Tuesday’s US economic docket features the release of JOLTS Job Openings data, which might influence the USD price dynamics and further contribute to producing short-term trading opportunities.

Technical Analysis: Gold price once again faces rejection near 50-day SMA, $2,319-18 support holds the key for bulls

From a technical perspective, the Gold price, so far, has been struggling to make it through the 50-day Simple Moving Average (SMA) pivotal resistance. The said barrier is currently pegged near the $2,337-2,338 region and should act as a key pivotal point. A sustained strength beyond should pave the way for a move towards the next relevant hurdle near the $2,360-2,365 supply zone. Some follow-through buying should allow bulls to reclaim the $2,400 round-figure mark and aim towards challenging the all-time peak, around the $2,450 area touched in May.

On the flip side, weakness below the $2,319-2,318 area, or the overnight swing low, could find some support near the $2,300 mark ahead of the $2,285 horizontal zone. Failure to defend the said support levels will be seen as a fresh trigger for bearish traders and drag the Gold price to the 100-day SMA, currently near the $2,258 area. The downward trajectory could eventually drag the XAU/USD to the $2,225-2,220 region en route to the $2,200 round-figure mark.

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