Gold price struggles to capitalize on its gains recorded over the past two trading sessions and comes under some selling pressure on Wednesday. The XAU/USD remains depressed through the first half of the European session and is currently placed around the $2,030 region, just above the daily low touched in the last hour.
Modest US Dollar Strength Weighs On Gold Price
The US Dollar (USD) edges higher for the third straight day amid the recent rise in the US Treasury bond yields, led by easing fears of a full-blown banking crisis in the United States (US). This, in turn, is seen as a critical factor exerting some pressure on the US Dollar-denominated Gold price. That said, the uncertainty over the US debt limit and expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle act as a headwind for the US bond yields.
Fed’s Less Hawkish Outlook, US Debt Ceiling Worries To Limit Losses
It is worth recalling that the Fed last week outlined a more stringent and data-driven approach to hiking rates further. Moreover, the markets have been pricing in the possibility of rate cuts later this year, which, in turn, is holding back the USD bulls from placing aggressive bets. Besides this, worries about slowing economic growth and the US debt ceiling should help limit any meaningful downside for the traditional safe-haven Gold price, at least for now.
Traders Now Look To Consumer Inflation Figures From United States
US President Joe Biden and House of Representatives Speaker Kevin McCarthy remained divided over raising the $31.4 trillion US debt limit following talks on Tuesday. The two, however, agreed to further talks aimed at breaking the deadlock. Traders also seem reluctant and might prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures, due later during the early North American session, for a fresh directional impetus.
Any signs of further easing inflationary pressures will reaffirm expectations for a less hawkish Fed and prove to damage the Greenback. Nevertheless, the crucial Consumer Price Index (CPI) report should influence market expectations about the Fed’s next policy move, which, in turn, will play a key role in driving the USD demand and help determine the near-term trajectory for Gold price. Nevertheless, the fundamental backdrop still seems tilted in favour of bullish traders.
Gold Price Technical Outlook
From a technical perspective, any subsequent slide will likely find some support near the $2,014 area or the weekly top touched on Monday. This is closely followed by the $2,000 psychological mark, which might prompt some technical selling if broken. The Gold price might turn vulnerable, accelerating the fall towards the $1,980 zone en route to the $1,970 horizontal solid support. Some follow-through selling will negate any near-term positive outlook and shift the bias toward bearish traders.
Conversely, the $2,040-$2,050 region might continue as an immediate strong barrier. Some follow-through buying can lift Gold’s price back towards the all-time high, around the $2,078-$2,079 region touched last Thursday. The momentum could extend further, allowing bulls to conquer the $2,100 round-figure mark.