Gold price consolidates in $3,320-3,330 band; looks to Fed for meaningful impetus

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

• A modest USD pullback and the cautious market mood lend support to the commodity.

• Hawkish Fed expectations and trade optimism act as a headwind for the precious metal.

Gold price (XAU/USD) seesaws between tepid gains/minor losses during the Asian session on Wednesday, warranting some caution before positioning for an extension of this week's bounce from the $3,300 neighborhood. Traders seem reluctant and opt to wait for more cues about the Federal Reserve's (Fed) rate-cut path before placing fresh directional bets around the non-yielding yellow metal. Hence, the market focus will remain glued to the outcome of a two-day FOMC policy meeting, due to be announced later today.

In the meantime, the market nervousness ahead of the key central bank event offers support to the safe-haven Gold price. Apart from this, a modest US Dollar (USD) pullback from its highest level since June 23, touched on Tuesday, turns out to be another factor acting as a tailwind for the commodity. However, the growing acceptance that the Fed will keep interest rates higher for longer limits the USD corrective slide and caps the non-yielding yellow metal. Furthermore, trade optimism warrants some caution for the XAU/USD bulls. 

Daily Digest Market Movers: Gold price traders opt to wait for cues about Fed’s rate-cut path 

The US Dollar bulls take a brief pause following the recent sharp rally to over a one-month peak touched on Tuesday and ahead of the crucial FOMC monetary policy decision later this Wednesday. According to the CME Group's FedWatch Tool, traders are currently pricing in a 97% chance that the Federal Reserve will leave interest rates unchanged in the 4.25-4.50% range despite relentless pressure from US President Donald Trump.

Hence, the focus will remain glued to the accompanying monetary policy statement and Fed Chair Jerome Powell's comments during the post-meeting press conference. There is still a possibility of a more hawkish tone amid the upside risks to inflation from higher US tariffs. Investors, however, still expect the Fed to signal a rate cut in September. Nevertheless, the outlook will drive the USD and influence the non-yielding Gold price. 

Heading into the key central bank event, traders will take cues from the US ADP report on private-sector employment amid signs of a slowdown in the labor market. In fact, the Job Openings and Labor Turnover Survey (JOLTS) published by the US Bureau of Labor Statistics on Tuesday showed that the number of job openings stood at 7.43 million in June, compared to May's downwardly revised print of 7.71 million and 7.55 million expected. 

Separately, the Conference Board's Consumer Confidence Index rose to 97.2 in July from 95.2 the previous month, suggesting that consumers are feeling optimistic. This could translate into increased consumer spending and play a significant role in stimulating economic activity. Hence, investors on Tuesday will also keep a close eye on the Advanced Q2 GDP print, which could provide some impetus to the buck and the XAU/USD pair. 

Market players this week will also confront the release of the US Personal Consumption Expenditure (PCE) Price Index and the Nonfarm Payrolls (NFP) report on Thursday and Friday, respectively. This should continue to infuse some volatility through the second half of the week and produce some meaningful trading opportunities around the commodity.

Gold price seems vulnerable while below 100-SMA on H4; $3,300 holds the key for bulls 

From a technical perspective, the recent breakdown below the 100-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for the XAU/USD bears. Moreover, negative oscillators on the said chart suggest that any subsequent move up might still be seen as a selling opportunity and remain capped. However, a modest bounce from the $3,300 neighborhood, or a nearly three-week low touched on Monday, warrants some caution for bearish traders. Hence, it will be prudent to wait for a convincing break below the said handle before positioning for any further losses towards the $3,260-3,255 support, representing the 100-day SMA. 

On the flip side, the $3,345 area (100-period SMA on the 4-hour chart) could act as an immediate hurdle, above which the Gold price could climb to the $3,367-3,368 region. A sustained strength beyond the latter might trigger a short-covering rally and allow the XAU/USD pair to reclaim the $3,400 round figure. The momentum could extend further, though it is likely to face a stiff hurdle near the $3,434-3,435 region. Some follow-through buying, however, would negate any near-term negative bias and pave the way for a move towards challenging the all-time peak, around the $3,500 psychological mark touched in April.