Gold price surrenders modest intraday gains, looks to US macro data and FOMC minutes

• Gold price attracts some intraday sellers amid a modest USD uptick, albeit lacks follow-through.
• Elevated US bond yields lend some support to the buck and act as a headwind for the XAU/USD.
• Fed rate cut bets, geopolitical risks and China’s economic woes should help limit deeper losses.
• Traders might also prefer to wait for the US macro data and the crucial FOMC meeting minutes.

Gold price (XAU/USD) struggles to capitalize on its modest intraday gains and retreats to the lower end of its intraday trading range during the first half of the European session on Wednesday. The US Dollar (USD) attracts some dip-buying and flirts with over a one-week high touched the previous day amid doubts over the possibility of early interest rate cuts by the Federal Reserve (Fed). This is reinforced by a further rise in the US Treasury bond yields, which, in turn, is seen as a key factor acting as a headwind for the non-yielding yellow metal.

The current market pricing, however, indicates a greater chance that the US central bank will start easing its monetary policy as early as March. This, along with concerns about fragile economic recovery in China and geopolitical risks, might continue to lend some support to the Gold price. Traders might also refrain from placing aggressive directional bets ahead of the FOMC meeting minutes, which might offer cues about the Fed's future policy moves. In the meantime, the US ISM Manufacturing PMI and JOLTS Job Openings data might provide some impetus. 

Daily Digest Market Movers: Gold price is undermined by a further rise in the US bond yields

• A combination of supporting factors assists the Gold price to regain positive traction on Wednesday and snap a three-day losing streak.
• Bets that the Federal Reserve will cut interest rates in March turn out to be a key factor lending support to the non-yielding yellow metal.
• The possibility of a further escalation of conflict in the Red Sea, along with China's economic woes, also acts as a tailwind for the safe-haven metal.
• The official Chinese PMI released over the weekend indicated a further deterioration in manufacturing activity and little signs of recovery at the end of 2023.
• A private survey showed on Tuesday that China's factory activity expanded at a quicker pace in December but business confidence for 2024 remained subdued.
• The US Dollar consolidates the overnight strong gains to a more than one-week top, helped by a sharp rise in the US bond yields, and caps the commodity.
• Traders might also prefer to wait on the sidelines ahead of the US ISM Manufacturing PMI, JOLTS Job Openings data and the crucial FOMC meeting minutes.

Technical Analysis: Gold price retreats to the lower end of its intraday trading range

From a technical perspective, the overnight failure near the all-time high closing, around the $2,077-2,078 region, and the subsequent slide warrants caution for bullish traders. The said hurdle should now act as a key pivotal point, which if cleared decisively will set the stage for a move towards reclaiming the $2,100 round-figure mark. Meanwhile, oscillators on the daily chart are holding comfortably in the positive territory and support prospects for the emergence of some dip-buying at lower levels.

The overnight low, around the $2,055 area, now seems to protect the immediate downside ahead of the $2,040 horizontal zone. A convincing break below the latter might turn the Gold price vulnerable to accelerate the downfall further towards the $2,020 intermediate support en route to the 50-day Simple Moving Average (SMA), currently near the $2,008-2,007 region, and the $2,000 psychological mark. Some follow-through selling will expose the $1,960 confluence, comprising the 100- and the 200-day SMAs.