• Diverging influences combine to impact the gold price, which makes it challenging to acquire momentum.
• Uncertainty over the Fed’s potential three rate-cutting actions this year boosts the USD and limits gains.
• Both geopolitical uncertainties and a milder risk tone support the safe-haven commodity.

Wednesday’s Asian session saw some dip buying in the gold market (XAU/USD), which appears to have stopped the previous day’s late decline from the psychological $2,200 level for the time being. Last Thursday, the Federal Reserve (Fed) signaled that it is still planning to lower interest rates by 75 basis points by 2024. This turns out to be one of the main reasons supporting the safe-haven precious metal, along with a softer risk tone despite worries about geopolitical dangers resulting from the extended Russia-Ukraine war and conflicts in the Middle East.

However, with some further US Dollar (USD) purchasing and Tuesday’s better-than-expected US Durable Goods Orders release, the upside potential for the gold price appears to be limited. Together with sticky inflation, the statistics supported the notion that the US economy is doing well, which may compel the Federal Reserve (Fed) to maintain higher interest rates for an extended period. As the USD moves closer to the multi-week high it achieved last Friday; the prognosis continues to be positive for rising US Treasury bond yields, which may limit gains for the non-yielding yellow metal.

The price of gold continues to stabilize as traders wait for additional indications regarding the Fed’s rate-cutting trajectory.

• The Federal Reserve signaled three rate cuts by year-end and predicted a less restrictive monetary policy in the future last week, which is encouraging for the non-yielding gold price.
• There is a chance that tensions will rise even further as a result of Russia’s increased attacks on Ukrainian energy infrastructure in retaliation for the latter’s recent wave of drone strikes on its oil refineries.
• Investors’ enthusiasm for risky assets was tempered on Tuesday when Iran-backed Houthi terrorists announced that they had launched six attacks on ships in the Red Sea and the Gulf of Aden in the previous 72 hours.
• The US Dollar extended its small gains of the prior day, which came after data showed that US durable goods orders increased by 1.4% in February after falling by 6.2% the month before.
• In a related development, the Conference Board revealed that, as recessionary fears subsided, the US Consumer Confidence Index fell to 104.7 in March, miniature from the 104.8 figure from the previous month.
• Additionally, consumers’ expectations for inflation increased slightly from 5.2% in February to 5.3% in the reported month, which may compel the Federal Reserve to maintain higher interest rates for an extended period.
• The prognosis calls for caution for XAU/USD bulls as it maintains the yield on the benchmark 10-year US government bond over the 4.0% threshold and supports the US currency.
• To get additional indications regarding the direction of Fed policy and to make new directional bets, traders may also choose to hold off until the US Personal Consumption and Expenditure (PCE) Price Index is released.

Technical Analysis: It appears that the price of gold is about to rise above $2,200 once more and test the record-high

Technically speaking, the range-bound price action that has been present for the last two weeks or so may be described as a bullish consolidation phase, given the massive surge that has occurred since the start of the month. Additionally, oscillators on the daily chart are supporting the possibility of a future upside breakout by firmly maintaining their positive zone. The positive setup will be confirmed by some follow-through purchasing over $2,200, which will enable the price of gold to retest the record high, which was touched last week in the $2,223 zone.

Conversely, any corrective slide should find some support in the vicinity of $2,164–2,163 before moving on to the $2,156-2,155 zone and the $2,147–2,146 area. A decisive break below the latter might lead to intense technical selling and push the price of gold closer to the next significant support, which is located in the $2,128–2,127 range and ultimately to the $2,100 round number. The handle above should serve as a solid foundation for the XAU/USD, and if it is forcefully broken, it will signal that the market has peaked shortly and open the door for further losses.