Gold price trades with modest losses below $2,400 mark, downside seems limited

■Gold price drifts lower on Monday amid hopes that the Iran-Israel conflict will not escalate further.

■Reduced Fed rate cut bets are keeping the US bond yields elevated and also exert pressure on the metal.

■The fundamental backdrop warrants caution before positioning for any further depreciating move.

Gold price (XAU/USD) kicks off the new week on a weaker note and, for now, seems to have snapped a two-day winning streak, though it remains confined in a familiar trading range held over the past week or so. Hopes for an Iran-Israel conflict de-escalation boost investors' confidence and turn out to be a key factor driving flows away from the safe-haven precious metal. Apart from this, bets that the Federal Reserve (Fed) will keep interest rates higher for longer in the wake of still sticky inflation in the US exert additional pressure on the non-yielding commodity. 

The downside for the Gold price, however, seems cushioned amid speculations that major central banks will cut interest rates this year. Adding to this, worsening global economic conditions should contribute to limiting any meaningful depreciating move for the XAU/USD. Traders also seem reluctant and prefer to wait on the sidelines ahead of this week's release of flash global PMIs on Tuesday and important US macro data – the Advance Q1 GDP report and the Personal Consumption Expenditures (PCE) Price Index on Thursday and Friday, respectively. 

Daily Digest Market Movers: Gold price is pressured by fading safe-haven demand, hawkish Fed expectations

Iran signaled that it has no plans to retaliate against the Israeli limited-scale missiles strike on Friday, easing fears about a further escalation of geopolitical tensions in the Middle East and undermining the safe-haven Gold price. 

Investors have pushed back their expectations about the timing of the first interest rate cut by the Federal Reserve to September and also downsized bets for the number of rate cuts in 2024 to two, or around 40 basis points.

Chicago Fed President Austan Goolsbee argued on Friday that progress on US inflation has stalled this year and that it would make sense to wait to get more clarity on the inflation outlook before taking a policy step.

The yield on the benchmark 10-year US government bond stands tall near a multi-month peak, which, in turn, is seen acting as a tailwind for the US Dollar and exerting additional pressure on the non-yielding yellow metal.

Concerns about slowing global economic growth support prospects for synchronized interest-rate cuts by most major central banks in the second half of this year, which, in turn, could lend support to the XAU/USD.

Traders might also wait for this week's release of flash global PMI prints, the Advance US Q1 GDP report, and the US Personal Consumption Expenditures (PCE) Price Index before placing fresh directional bets.

Technical Analysis: Gold price oscillates in a one-week-old trading range, bullish potential seems intact

From a technical perspective, the range-bound price action witnessed over the past week or so constitutes the formation of a rectangle on short-term charts. Against the backdrop of the recent blowout rally, this might still be categorized as a bullish consolidation phase. Moreover, oscillators on the daily chart have eased from the overbought territory and suggest that the path of least resistance for the Gold price is to the upside. That said, bulls might wait for sustained strength and acceptance above the $2,400 mark – representing the top end of the trading range – before positioning for any further gains. 

On the flip side, the lower boundary of the aforementioned range, around the $2,364-2,363 region, is likely to protect the immediate downside and act as a key pivotal point. A convincing break below might prompt some technical selling and drag the Gold price to the $2,325-2,322 area en route to the $2,300 round figure.