Gold price moves away from all-time peak, downside seems cushioned

Gold price (XAU/USD) pulls back after refreshing a record high on Wednesday and touches a daily low, around the $2,655 area heading into the European session. The prevalent risk-on mood, along with slightly overbought conditions on the daily chart, prompts some profit-taking and exerts pressure on the precious metal amid a modest US Dollar (USD) uptick. Any meaningful corrective slide, however, seems elusive amid bets for a more aggressive policy easing by the Federal Reserve (Fed). This should act as a headwind for the USD and could offer support to the non-yielding yellow metal. 

Apart from this, the risk of a further escalation of geopolitical tensions in the Middle East, along with the US political uncertainty ahead of the November presidential election, should help limit the downside for the Gold price. Traders might also prefer to wait for more cues about the Fed's rate-cut path before placing fresh directional bets. Hence, the focus remains on speeches by influential FOMC members, including the Fed Chair Jerome Powell on Thursday. Apart from this, the US Personal Consumption Expenditure (PCE) Price Index on Friday will drive the USD demand and the XAU/USD. 

Daily Digest Market Movers: Gold price witnessed some profit-taking amid risk-on, bullish potential seems intact

• According to the CME Group's FedWatch Tool, the markets are currently pricing in over a 75% chance that the Federal Reserve will cut interest rates by another 50 basis points in November. 
• Adding to this, Tuesday's weaker US macro data weighed heavily on the US Dollar and dragged it back closer to the YTD low, lifting the non-yielding Gold price to a fresh all-time peak. 
• The Conference Board's (CB) Consumer Confidence Index deteriorated in September and dropped to 98.7, from August's 105.6, while the Present Situation Index fell to 124.3 from 134.6. 
• A survey from the Richmond Fed indicated that manufacturing activity remained sluggish and the composite manufacturing index declined to -21 in September from the previous -19. 
• Israeli airstrikes in southern and eastern Lebanon on Monday, which killed over 500 people, raised the risk of a broader war in the Middle East and further boosted the safe-haven XAU/USD. 
• The latest optimism led by China's new stimulus measures remains supportive of the risk-on rally, albeit does little to dent the strong bullish sentiment surrounding the precious metal. 
• Speeches by Fed officials this week, including the Fed Chair Jerome Powell on Thursday, will be looked at for cues about the rate-cut path and provide a fresh impetus to the commodity.
• The focus, meanwhile, will remain glued to the release of the US Personal Consumption Expenditure (PCE) Price Index on Friday, which will drive the USD demand in the near term.

Technical Outlook: Gold price is likely to find support near ascending channel resistance breakpoint, around $2,625 area

From a technical perspective, this week’s breakout through a short-term ascending channel and the subsequent move up supports prospects for additional gains. That said, the Relative Strength Index (RSI) on the daily chart has moved above the 70 mark, suggesting slightly overbought conditions. This, in turn, makes it prudent to wait for some near-term consolidating or a modest pullback before placing fresh bullish bets around the Gold price. 

In the meantime, any corrective slide is more likely to attract some dip-buying and find decent support near the ascending channel resistance breakpoint, around the $2,625 region. This is followed by the $2,600 round figure, which if broken decisively might prompt some technical selling and drag the Gold price towards the $2,575 region en route to the $2,560 area and the $2,535-2,530 resistance-turned-support.