The XAU/USD is currently hovering around the $2,030 mark and struggles to capitalize on the gains recorded over the past two trading sessions. The recent rise in US Treasury bond yields, fueled by the easing of fears of a banking crisis in the United States, has led to modest US Dollar strength, exerting pressure on the US Dollar-denominated Gold price.
Despite the Federal Reserve's more stringent approach to hiking rates and the markets' pricing in of rate cuts later this year, worries over slowing economic growth and the US debt limit are acting as headwinds for the USD bulls. This should help limit any meaningful downside for Gold, the traditional safe-haven asset, at least for the time being.
Traders are reluctant to take aggressive bets ahead of the release of the latest US consumer inflation figures, due later during the early North American session. Any signs of a further easing of inflationary pressures will reaffirm expectations for a less hawkish Fed and prove negative for the Greenback. Nevertheless, the crucial Consumer Price Index (CPI) report should influence market expectations about the Fed's next policy move and help determine the near-term trajectory for Gold.
From a technical perspective, any subsequent slide will likely find some support near the $2,014 area, closely followed by the $2,000 psychological mark. However, a break below $2,000 might prompt some technical selling and make the Gold price vulnerable to accelerate its fall. On the flip side, the $2,040-$2,050 region might continue to act as an immediate strong barrier. Some follow-through buying has the potential to lift Gold price back towards the all-time high, around the $2,078-$2,079 region touched last Thursday.
Despite the uncertainty over the US debt limit and the recent modest US Dollar strength, the fundamental backdrop still seems tilted in favour of bullish traders. The traditional safe-haven Gold price might find support from worries over slowing economic growth and expectations of a less hawkish Fed. However, traders await the US consumer inflation figures for a fresh directional impetus.
The forex market is closely watching the Gold price amid the recent uncertainty over the US debt limit and the impact of the latest US consumer inflation figures. The modest strength of the US Dollar and worries over slowing economic growth continue to exert pressure on the XAU/USD. However, the fundamental backdrop still seems to favour bullish traders, with the traditional safe-haven asset likely to find support amidst these headwinds. From a technical perspective, any slide in the Gold price will likely find support near the $2,014 area, but a break below $2,000 may make it vulnerable to further downside. The $2,040-$2,050 region is likely to act as a strong barrier for the Gold price, with some follow-through buying has the potential to lift it back towards its all-time high of around the $2,078-$2,079 region. Overall, the forex market closely monitors the Gold price and its response to the ongoing uncertainty and economic data releases.