Gold price attracts fresh sellers amid renewed USD buying and reduced Fed rate cut bets.
A generally positive risk tone is seen as another factor undermining the precious metal.
Persistent trade-related uncertainties could limit losses for the safe-haven commodity.
Gold price (XAU/USD) drifts lower during the Asian session on Thursday and moves further away from a three-week top, around the $3,377 area touched the previous day. US President Donald Trump denied reports that he is planning to fire Federal Reserve (Fed) Chair Jerome Powell. Apart from this, the growing acceptance that the US central bank will delay cutting interest rates assists the US Dollar (USD) to regain positive traction and reverse Wednesday's pullback from its highest level since June 23. This, along with a generally positive tone around the equity markets, is seen undermining the precious metal.
That said, persistent uncertainties surrounding Trump's trade policies and their impact on the global economy keep investors on edge. This might continue to offer some support to the safe-haven Gold price and warrants caution for bearish traders. Hence, it will be prudent to wait for strong follow-through selling before positioning for any further depreciating move. Investors now look to the release of US Retail Sales and the usual Weekly Initial Jobless Claims data. Apart from this, speeches from influential FOMC members should drive the USD demand and produce trading opportunities around the non-yielding yellow metal.
Daily Digest Market Movers: Gold price is pressured by fading safe-haven demand, modest USD strength
Investors turned nervous on Wednesday, prompting heavy US Dollar selling and pushing the safe-haven Gold price to a fresh multi-week top amid reports that US President Donald Trump was seeking to remove Federal Reserve Chair Jerome Powell. The market volatility, however, subsided after Trump told reporters that he was unlikely to fire the central bank chief.
On the economic data front, the US Producer Price Index (PPI) fell short of market expectations and remained flat in June. This marked a notable deceleration in the price of goods sold by manufacturers. Adding to this, comments from influential FOMC members suggest that the Fed would probably wait at least until September before resuming its rate-cutting cycle.
Meanwhile, New York Fed President John Williams warned that the impact of trade tariffs is modest so far but will increase over time. Williams added that the economy is in a good place, the labor market is solid, and the current modestly restrictive monetary policy is in the right place to allow policymakers to monitor the economy before taking the next steps.
Adding to this, Dallas Fed President Lorie Logan said that the US central bank will probably need to leave interest rates for a while longer to ensure inflation stays low. Logan further noted that tariff increases appear likely to create inflationary pressure, and June CPI data suggests that the PCE inflation, which the Fed targets to be at a 2% annual rate, will rise.
Nevertheless, traders are still pricing in the possibility of 50 basis points worth of easing by the Fed this year. This, along with worries about the potential economic fallout from Trump's erratic trade policies, could underpin the safe-haven precious metal. In fact, Trump last week notified leaders of 25 countries about new tariff rates set to take effect on August 1.
Thursday's US economic docket features the release of monthly Retail Sales figures, the usual Weekly Initial Jobless Claims, and the Philly Fed Manufacturing Index. Apart from this, comments from influential FOMC members will be scrutinized for cues about the Fed's rate-cut path, which will drive the USD and provide some impetus to the XAU/USD pair.
Gold price remains confined in the monthly trading range; $3,300 holds the key for bulls
From a technical perspective, the recent range-bound price action since the beginning of this month points to indecision among traders. Furthermore, neutral oscillators on the daily chart warrant some caution before positioning for the next leg of a directional move. Hence, any further slide is more likely to find some support near the $3,322-$3,320 horizontal zone ahead of the $3,300 round figure. Some follow-through selling below the $3,283-3,282 region, or a one-week low touched last Tuesday, would lead to the Gold price accelerating the corrective fall towards the July swing low, around the $3,248-3,247 zone.
On the flip side, the $3,365-3,366 region could act as an immediate hurdle ahead of the $3,377 area, or the overnight high, above which the Gold price could aim to reclaim the $3,400 round figure. Some follow-through buying has the potential to lift the commodity further towards the next relevant hurdle near the $3,434-3,435 area.
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