• Gold price consolidates in a narrow trading band above the $2,000 mark on Friday.
• Rising US bond yields underpin the USD and cap the yellow metal amid a positive risk tone.
• Reviving bets for an early Fed rate cut and geopolitical risks support the commodity.

Before Friday’s European session, the price of gold (XAU/USD) failed to build on the previous day’s gains and moved in a narrow range above the key $2,000 barrier. Following a small increase in US Treasury bond yields, the US Dollar (USD) draws some buyers and appears to have stopped a two-day correction decline from a three-month-high. This is perceived as a negative factor for the commodities. In addition, a generally upbeat outlook for the equities markets limits the rise of the safe-haven precious metal.

Despite the weaker-than-expected US Retail Sales report released on Thursday, the Federal Reserve (Fed) is expected to start cutting interest rates shortly, which has buffered the downside for the gold price. This should prevent aggressive wagers by USD bulls, which, along with geopolitical threats from Middle East tensions, should help keep losses for the unyielding yellow metal to a minimum. The US macro data, which includes the Producer Price Index (PPI), Housing Starts, and Michigan Consumer Sentiment Index, is now anticipated by market participants.

 

The data will increase demand for USD and provide a new boost to the price of gold, along with remarks by significant FOMC members. Additionally, traders will use the general risk sentiment as a guide to seize short-term chances surrounding the metal. However, the focus now turns to releasing the FOMC meeting minutes and the flash global PMIs on Wednesday and Thursday of next week, respectively, meaning that the XAU/USD is still expected to see losses for the second straight week.

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Daily Digest Market Movers: Gold price struggles to lure buyers amid rising US bond yields, modest USD uptick

• Diverging dynamics prevent the gold price from benefiting from this week’s slight rebound from its lowest point since November 13.
• The benchmark 10-year US government bond yield remains over 4.0%, which limits the upside for the XAU/USD pair and stimulates demand for the USD.
• The depressing US data released on Thursday gives rise to expectations of an early rate decrease by the Federal Reserve and increases investor confidence, further damaging the safe-haven metal.
• Following the publication of worse US retail sales, best for a 25 basis point rate decrease in May nudged up to 40%, and the odds on a move in June stood at 80%.
• According to the Commerce Department, sales of goods other than autos fell by 0.6% in January, and retail sales fell by a substantial 0.8%.
• According to a different estimate, import prices increased by 0.8% in January, marking the largest increase over two years, although the annual rate decreased by 1.3%.
• In the meantime, jobless claims fell by 8K from 220K the week before to 212K, a one-month low, in the week ending on February 10.
• Bostic, president of the Atlanta Fed, stated on Thursday that the US central bank has successfully reduced inflation and would soon consider reducing interest rates.
• Bostic said the Fed does not need to lower interest rates, since a robust economy justifies patience in changing monetary policy.
• The likelihood of a larger Middle East confrontation has increased, according to the Israeli military, which stated on Wednesday that its fighter jets had started a string of strikes in Lebanon.
• As a potential new catalyst, traders now watch the US Producer Price Index for clues regarding the Fed’s next course of action and rate-cutting trajectory.
• The US economic docket for Friday includes the preliminary Michigan Consumer Sentiment Index for February and Housing Starts.
• Influential FOMC members’ statements will fuel USD demand and create short-term possibilities surrounding the XAU/USD.

Technical Analysis: The price of gold ranges and stays susceptible below the 50-day SMA.

Technically speaking, any further upward move will probably run into some resistances close to the $2,015 mark. The gold price should be able to test the 50-day SMA, which is presently at $2,030, with some follow-through buying. The latter ought to serve as a crucial turning point that, if overcome with conviction, would pave the way for further increases past the $2,044–2,045 intermediate barriers and into the $2,065 supply zone.

Conversely, the 100-day simple moving average presently trading between $1,992 and $1,991 may provide instant support before the $1,984 zone or the two-month low reached on Wednesday. The crucial 200-day SMA, now positioned around the $1,965 region, comes next. This will be interpreted as a new catalyst for bearish trades if broken forcefully. The price of gold may continue to decline towards the November 2023 low, located in the $1,932-1,931 range, and the intermediate support zone around $1,952-1,950.

US Dollar price today

The US dollar’s (USD) percentage change compared to a list of major currencies is displayed in the table below. Concerning the Canadian dollar, the US dollar was the weakest.

The major currencies’ percentage movements relative to one another are displayed on the heat map. The quotation currency is selected from the top row, and the base currency is selected from the left column. For example, the percentage change shown in the box will indicate EUR (base)/JPY (quote) if you select the Euro from the left column and proceed along the horizontal line to the Japanese Yen.

Conclusion

Recap of the Fundamentals

The gold market is a veritable stage for a cavalcade of fundamental cues, offering risks and rewards for the discerning investor. Balancing these cues requires nuance and an unwavering attention to detail.

The Imperative of Constant Vigilance

The only certainty in the gold market is its unrelenting change. For those looking to hedge their bets on this golden line, staying informed, maintaining flexibility, and adapting to the mercurial nature of the metal is the key to success.

In the dance of the fundamental cues, gold remains a steadfast partner to those bold enough to waltz with it across the stormy sea of global economics. As the world’s financial weather forecasts continue to hint at changing winds, understanding these cues may be the edge investors need to keep their portfolios afloat and glisten with potential.