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    Gold price remains confined in a range as traders await US inflation data on Thursday

    FXStreet
    Updated Feb 28, 2024 05:29
    Mitrade

    ■  Gold price attracts some buyers on Wednesday, albeit it lacks bullish conviction.

    ■  Hawkish Fed expectations underpin the USD and act as a headwind for the metal.

    ■  Traders also seem reluctant to place aggressive bets ahead of key US macro data.


    Gold price (XAU/USD) edges higher during the Asian session on Wednesday and for now, seems to have stalled the previous day's modest pullback from the $2,040-$2,042 resistance. Despite the uptick, the precious metal remains confined in a familiar range as traders keenly await the US Personal Consumption Expenditures (PCE) Price Index on Thursday for cues about the Federal Reserve's (Fed) rate-cut path. This, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide a fresh directional impetus to the non-yielding yellow metal.


    In the meantime, the FOMC meeting minutes released last week, along with the recent comments by Fed officials, suggested that the US central bank is in no rush to cut interest rates. This assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, to hold steady above a technically significant 200-day Simple Moving Average (SMA) and a multi-week low touched last Thursday. Apart from this, the recent risk-on rally across the global equity markets contributes to capping the safe-haven Gold price, though sliding US Treasury bond yields act as a tailwind.


    Daily digest market movers: Gold price extends the range play amid mixed fundamental cues


    A combination of diverging forces fails to provide any meaningful impetus to the Gold price, which extends its consolidative price move in a nearly one-week-old trading range.


    The Federal Reserve's higher-for-longer interest rates narrative lends some support to the US Dollar and continues to undermine the non-yielding yellow metal on Wednesday.


    A fresh leg down in the US bond yields, along with the looming US government shutdown and Tuesday's disappointing release of US Durable Goods Orders, should cap the USD.


    US President Joe Biden emphasized the necessity of finding a solution to prevent a detrimental government shutdown on March 1 as a legislative logjam showed no signs of abating.


    The US Census Bureau reported that orders for long-lasting US manufactured goods experienced a larger-than-expected decline of 6.1% in January, the most in nearly four years.


    Meanwhile, the Conference Board's Consumer Sentiment Index fell after three straight months of gains and came in at 106.7 for February, despite declining inflation expectations.


    The Richmond Fed's Manufacturing Index recorded the fourth successive month of a negative reading, though improved to -5 in February as compared to  -15 in the previous month.


    Traders now look to the release of the Prelim US GDP print, which is expected to match the original estimates and show that the economy expanded by a 3.3% annualized pace in Q4.


    This, along with speeches by influential FOMC members, will play a key role in driving the USD demand and producing some meaningful trading opportunities around the XAU/USD.


    The focus, however, remains glued to the US Personal Consumption Expenditures Price Index on Thursday, which should provide fresh cues about the Fed's rate-cut path.


    Technical analysis: Gold price needs to break through $2,040-42 barrier for bulls to seize control


    From a technical perspective, the $2,041-2,042 area, or over a two-week high touched last Thursday, might continue to act as an immediate hurdle and cap gains for the Gold price. That said, a sustained strength beyond will confirm a break through the 50-day Simple Moving Average (SMA) barrier and pave the way for additional gains. Given that oscillators on the daily chart have just started gaining positive traction, the XAU/USD might then climb to the next relevant hurdle near the $2,065 region before aiming to reclaim the $2,100 round-figure mark.


    On the flip side, the weekly trough. around the $2,025 region, now seems to protect the immediate downside ahead of the 100-day SMA, currently near the $2,011-2,010 area, and the $2,000 psychological mark. Some follow-through selling below the latter will shift the near-term bias back in favour of bearish traders and drag the Gold price to the $1,984 region en route to the very important 200-day SMA support near the $1,967 zone.

    * The content presented above, whether from a third party or not, is considered as general advice only.  This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.

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