Gold price hovers around the 50-day SMA as traders eye flash PMIs

• Gold remains stable within the $2020-30 range following the Fed's latest monetary policy insights.
• US Treasury yields and the Dollar show minimal reaction to Fed's commitment to inflation targets.
• Market anticipates potential rate adjustments in June, after the release of the latest FOMC meeting minutes.

Gold price is virtually unchanged after the US Federal Reserve (Fed) released January’s meeting minutes, which reassured market participants that the Fed is in no rush to cut rates in the near term. Even though that could be seen as “hawkish,” US Treasury bond yields remained within familiar levels at the release, while the Greenback (USD) edged down by 0.04%. The XAU/USD trades within the $2020-30 range, at the time of writing.

The Federal Open Market Committee (FOMC) minutes showed Fed officials remain hesitant to cut rates too soon, while adding they did not see it appropriate to lower interest rates until they gained “greater confidence” in inflation moving sustainably towards 2%. Even though policymakers acknowledged that the risks of achieving both mandates is more balanced, they remained “highly attentive” to inflationary risks, even though economic risks are skewed to the downside.

On the release, the US 10-year Treasury note yield is up three and a half basis points at 4.315%. At the same time, the US Dollar Index (DXY), which tracks the performance of the Greenback versus the other six currencies, dropped 0.04% to 104.01. Following the release, the Fed funds futures contracts continued to price in Jun as the first Fed rate cut.

Daily digest market movers: Gold retraces as traders expect less dovish Fed

• The CME FedWatch Tool sees traders expect the first 25 bps rate cut by the Fed in June 2024.
• Investors are pricing in 95 basis points of easing throughout 2024.
• The US Dollar Index, tracking the performance of the US Dollar against a basket of six major currencies, is currently trading within a narrow range around 104.10, up 0.03%.
• The latest inflation reports from the US triggered a change of language from Fed officials, who struck a “cautious” tone. Atlanta Fed President Raphael Bostic suggested the Fed is in no rush to ease policy.
• Richmond Fed President Thomas Barkin said the latest inflation reports were “less good,” adding that the US has “a ways to go” to achieve a soft landing.
• San Francisco Fed President Mary Daly stated, “We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves.”
• This week the US economic schedule will feature the release of the latest Federal Reserve Open Market Committee (FOMC) Minutes alongside Fed officials' speeches beginning on Wednesday.
• Traders will get further cues from US S&P Global PMIs, Initial Jobless Claims data and the Chicago Fed National Activity Index, usually a prelude to the Institute for Supply Management's (ISM) Manufacturing PMI.

Technical analysis: Gold stays above 100-day SMA, eyes key resistance near 50-day SMA

Gold is trading range-bound though tilted to the downside as the yellow metal has achieved a successive series of lower highs and lows. Stir resistance at the 50-day Simple Moving Average (SMA) at $2,033.54 might cap XAU/USD’s upside, but if cleared, that would pave the way to test the $2,050.00 figure. Upside risks lie at $2,065.60, the February 1 high.

On the flip side, if sellers step in and push prices below the $2,000 figure, that will expose the 100-day SMA at $2,002.05. The next stop would be the December 13 low at $1,973.13, followed by the 200-day SMA at $1,965.86.