Gold price posts modest gains on weaker US Dollar, investors await US key data

■  Gold price gains momentum in Tuesday’s early Asian session. 

■  The weaker USD and ongoing Middle East geopolitical tensions support the precious metal. 

■  Traders will monitor the US CB Consumer Confidence and the speeches from the Fed’s Kashkari, Daly and Cook on Tuesday. 

Gold price (XAU/USD) edges higher on Tuesday after bouncing off two-week lows of $2,325. The uptick of yellow metal is bolstered by the softer US Dollar (USD) and safe-haven flows amid the ongoing geopolitical tensions in the Middle East. On the other hand, higher short-term Treasury yields following hawkish Fed minutes and stronger US economic data are likely to support the Greenback in the near term. Traders might prefer to wait on the sidelines ahead of the key US inflation data this week. 

The US Conference Board’s Consumer Confidence is due on Tuesday, along with the Fed’s Neel Kashkari, Mary Daly and Lisa Cook speeches. The US Core Personal Consumption Expenditures Price Index (Core CPE) will take center stage on Friday. More hawkish comments from Fed officials and any signs of sticky inflation, traders might shift back the prospects of the first Fed rate cut. This, in turn, is likely to boost the USD and exert some selling pressure on the USD-denominated gold price.  

Daily digest market movers: Gold price remains strong amid Fed’s hawkish comments and stronger US data

An Israeli airstrike triggered a fire that killed 45 people in a tent camp in the Gazan city of Rafah, officials said on Monday. Global leaders called for the implementation of a World Court order to halt Israel's attacks, per Reuters. 

According to the recent Fed meeting minutes, the central bank would take longer than anticipated to gain greater confidence in inflation moving to the 2% target. 

Traders have reduced their bets on interest rate reduction by the US Federal Reserve (Fed) to 49% odds in September, down from 63% a week earlier, according to the CME FedWatch tool.

The preliminary US Gross Domestic Product (GDP) Annualized is estimated to grow 1.4% in Q1 from 1.6% in the previous reading. 

The US Core Personal Consumption Expenditures Price Index (Core PCE), the Fed’s preferred inflation gauge, is expected to show an increase of 0.3% MoM and 2.8% YoY in April. 

UBS analysts raised their gold price projection to $2,600 by the end of 2024. Citi experts forecast that gold will reach $3,000 per ounce during the next six to eighteen months.

Technical analysis: Gold price maintains a positive stance in the long term

The gold price trades on a positive note on the day. According to the 1-hour chart, the precious metal keeps the bullish vibe unchanged as it holds above the key 100-day Exponential Moving Average (EMA). Nonetheless, the 14-day Relative Strength Index (RSI) hovers around the 50-midline, indicating a neutral level or balance between bullish and bearish positions, which means consolidation or directionlessness cannot be ruled out. 

The upper boundary of the Bollinger Band at $2,430 acts as an immediate resistance level for XAU/USD. Any follow-through buying above the mentioned level will attract some buyers to the all-time high of $2,450 and then the $2,500 psychological barrier. 

In the bearish environment, the first downside target will emerge near the $2,300 round mark. A breach of this level could drag the yellow metal lower to $2,268, followed by the 100-day EMA of $2,220.