Gold price defends 100-day SMA, rebounds from one-month low as USD pauses post-Fed rally

• Gold price attracts dip-buying as USD bulls pause after the overnight rally to a two-month high.

• The Fed’s hawkish tone tempers September rate cut bets and should limit any deeper USD losses.

• Traders now look forward to the release of the US PCE Price Index for some meaningful impetus.

Gold price (XAU/USD) gains some positive traction during the Asian session on Thursday and recovers a part of the previous day's hawkish Federal Reserve (Fed)-inspired slump to a one-month low. In fact, Fed Chair Jerome Powell showed no preference for cutting rates at the next meeting in September. This, along with the upbeat US macro data released earlier on Wednesday, pushed the US Dollar (USD) to a two-month peak and weighed heavily on the non-yielding yellow metal.

As investors digest the Fed policy update, the USD bulls pause for a breather ahead of the key US inflation data – the Personal Consumption Expenditure (PCE) Price Index – and offer some support to the Gold price. Apart from this, the cautious market mood is seen as another factor underpinning the safe-haven precious metal. However, reduced bets for an immediate rate cut by the Fed might hold back the XAU/USD bulls from placing aggressive bets and cap any further appreciation.

Daily Digest Market Movers: Gold price benefits from a softer USD; hawkish Fed to cap gains

The US Federal Reserve kept its benchmark interest rate unchanged for the fifth consecutive meeting, in a range of 4.25% to 4.5%, despite intense pressure from US President Donald Trump and his allies to lower borrowing costs. The decision, however, met opposition from Fed Governors Michelle Bowman and Christopher Waller. This was the first time since 1993 that two governors had dissented on a rate decision.

In the accompanying monetary policy statement, the committee had a more optimistic view and noted that the economy continued to expand at a solid pace. Adding to this, Fed Chair Jerome Powell said during the post-meeting press conference that the central bank had made no decisions about whether to cut rates in September. This comes on top of the upbeat US macro data, and lifted the US Dollar to a two-month high.

Automatic Data Processing reported that private payrolls in the US rose by 104,000 jobs in July, following a revised 23,000 fall recorded in the previous month. Adding to this, the Advance US Gross Domestic Product (GDP) report published by the US Commerce Department showed that the economy expanded at a 3.0% annualized pace during the second quarter after contracting by 0.5% in the previous quarter.

Traders now look to the Fed's preferred inflation gauge – the core PCE Price Index – for a fresh impetus. In the meantime, the USD bulls seem reluctant to place aggressive bets, assisting the Gold price to attract some buyers during the Asian session on Thursday. The fundamental backdrop, however, makes it prudent to wait for strong follow-through buying before confirming that the XAU/USD pair has bottomed out.

Gold price is likely to attract fresh sellers and remain capped near $3,309-3,310 barrier

From a technical perspective, the commodity finds some support ahead of the 100-day Simple Moving Average (SMA) and, for now, seems to have stalled the post-FOMC downfall. However, oscillators on the daily chart have just started gaining negative traction, suggesting that any subsequent strength beyond the $3,300 mark is more likely to be sold into and remain capped near the $3,310 area. A sustained move above the latter, however, could trigger a short-covering rally and lift the Gold price to the next relevant hurdle near the $3,325-3,326 horizontal zone.

On the flip side, the $3,275-3,270 area (nearing the 100-day SMA) might continue to protect the immediate downside, below which the Gold price could retest the June monthly swing low, around the $3,248-3,247 region. The latter should act as a key pivotal point, which, if broken decisively, will be seen as a fresh trigger for the XAU/USD bears and pave the way for a fall towards the $3,200 round figure.