Gold price struggles to lure buyers; remains below multi-week high touched on Tuesday

• Gold price struggles to capitalize on the previous day’s modest gains amid mixed fundamental cues.

• A modest USD uptick caps the commodity, though a combination of factors helps limit the downside.

• Fed rate cut bets, US fiscal concerns, geopolitical risks, and trade uncertainties favor the XAU/USD bulls.

Gold price (XAU/USD) edges lower following an Asian session uptick to the $3,384 area amid a slight US Dollar (USD) bounce, though the near-term bias seems tilted firmly in favor of bullish traders. Weaker-than-expected US economic data released on Wednesday boosted market expectations that the Federal Reserve (Fed) will lower borrowing costs further in 2025. This keeps the US Treasury bond yields depressed, which, along with US fiscal concerns, should cap the USD and lend support to the non-yielding yellow metal.

Apart from this, persistent trade-related uncertainties and rising geopolitical tensions validate the near-term positive outlook for the safe-haven Gold price. Investors, however, seem reluctant and opt to wait for the high-stakes call between US President Donald Trump and Chinese President Xi Jinping. Moreover, volatility is expected to remain suppressed ahead of the crucial US Nonfarm Payrolls (NFP) report on Friday, which might further hold back traders from placing aggressive directional bets around the precious metal.

Daily Digest Market Movers: Gold price bulls seem reluctant ahead of potential Trump-Xi call

Automatic Data Processing (ADP) reported on Wednesday that US private sector employers added only 37K jobs in May, below consensus estimates and marking the lowest level since March 2023. Adding to this, April's reading was revised to 60K from 62K reported originally.

Furthermore, a survey from the Institute for Supply Management (ISM) showed that business activity in the US services sector unexpectedly contracted in May for the first time since June 2024. In fact, the US ISM Services PMI dropped to 49.9 last month from 51.6 in April.

The rate-sensitive two-year and the benchmark 10-year US Treasury yields fell to the lowest level since May 9 amid bets that the Federal Reserve will cut interest rates in September. Moreover, US President Donald Trump pressed Fed Chair Jerome Powell to lower rates.

Dovish Fed expectations, along with concerns that the US budget deficit could worsen at a faster pace than expected on the back of Trump’s flagship tax and spending bill, fail to assist the US Dollar in attracting buyers. This lends some support to the non-yielding Gold price.

The increase in steel and aluminum import tariffs from 25% to 50% came into effect on Wednesday. This comes ahead of the high-stakes call between Trump and Chinese President Xi Jinping and amid renewed fears of a trade war between the world's two largest economies.

Trump said that he had spoken again to Russian President Vladimir Putin and that the Kremlin leader vowed to retaliate against the Ukrainian attack Russian bombers. Trump added that a Ukraine ceasefire remained distant, which keeps the geopolitical risk premium in play.

The US vetoed a United Nations Security Council resolution calling for an immediate, unconditional, and permanent ceasefire in Gaza for the fifth time. Meanwhile, Israeli strikes across Gaza have killed nearly 100 Palestinians in the past 24 hours amid a humanitarian aid blockade.

Traders now look forward to the release of the usual Weekly Initial Jobless Claims data from the US. Apart from this, speeches from influential FOMC members could provide some impetus in the run-up to the highly-anticipated US Nonfarm Payrolls (NFP) report on Friday.

Gold price technical setup point to move beyond $3,385 resistance

From a technical perspective, this week's breakout above the $3,324-3,326 barrier was seen as a key trigger for bulls. Moreover, oscillators on daily/hourly charts are holding comfortably in positive territory and suggest that the path of least resistance for the Gold price remains to the upside. However, it will be prudent to wait for some follow-through buying above the $3,385 region, or a multi-week top touched on Tuesday, before positioning for further gains. The XAU/USD pair might then surpass the $3,400 mark and climb further to the $3,433-3,435 region. The momentum could extend further toward the $3,500 neighborhood or the all-time peak set in April.

On the flip side, the $3,355 area could offer immediate support to the Gold price. Any further slide might continue to attract some dip-buyers and is more likely to remain limited near the aforementioned resistance breakpoint, around the $3,326-3,324 area. Some follow-through selling, however, could make the commodity vulnerable to weakening further below the $3,300 mark and testing the $3,286-3,285 horizontal support.