Gold price remains capped in a familiar range on Fed-rate cut uncertainty

• Gold price is seen consolidating near the top end of a short-term trading range. 
• Fed rate-cut uncertainty holds back traders from placing fresh directional bets.
• The USD is undermined by Tuesday’s weaker US Retail Sales and lends support.

Gold price (XAU/USD) struggles to capitalize on the previous day’s bounce from the vicinity of the $2,300 mark and oscillates in a narrow band during the early European session on Wednesday. The precious metal remains capped in a familiar trading range held over the past one-and-half-week or so as traders seek clarity about the likely timing when the Federal Reserve (Fed) will start cutting interest rates before placing fresh directional bets. 

The US central bank adopted a more hawkish stance at the end of the June policy meeting and forecasted only one rate cut this year. The markets, however, are still pricing in the possibility of two rate cuts in 2024 amid signs of easing inflation in the US. Moreover, weaker US Retail Sales data released on Tuesday pointed to signs of exhaustion among US consumers and lifted bets for the first Fed rate cut in September and another in December. 

Daily Digest Market Movers: Gold price extends the range play as traders seek clarity about Fed rate-cut path

• Investors remain uncertain about the Federal Reserve’s rate-cut path, which, in turn, fails to provide any meaningful impetus to the Gold price and leads to subdued range-bound price action.
• The Fed last week lowered its projection for the number of rate cuts in 2024 to one from three in March, though the incoming US macro data keeps hopes alive for the first rate cut in September.
• The bets were lifted by softer US consumer and producer prices data released last week, which suggested that inflation is subsiding, and disappointing US Retail Sales figures on Tuesday. 
• The Commerce Department reported that US Retail Sales rose 0.1% on a monthly basis in May as against the previous month’s downwardly revised fall of 0.2% and the 0.2% increase anticipated.
• The softer print pointed to signs of exhaustion among US consumers and that the economic activity was slowing, strengthening the case for the Fed to lower borrowing costs sooner than expected.
• In an interview with Fox Business, New York Fed President John Williams noted that the recent inflation data have been encouraging and added that he expects inflation to continue to come down.
• Richmond Fed President Thomas Barkin said that May inflation data was encouraging but it is hard to know how much signal to take from inflation last year, this quarter, or the last couple of weeks.
• Meanwhile, Boston Fed President Susan Collins said that inflation remains stubbornly high, and it will take more time than many had initially hoped to bring price growth back down to the 2% target.
• Fed Governor Adriana Kugler noted that economic conditions are moving in the right direction, and it is likely appropriate to begin easing policy sometime later this year if the economy evolves as expected.
• Dallas Fed President Lorie Logan reiterated that although tremendous progress has been made, inflation remains too high and will need to see ‘several more months’ to have confidence that it is heading to 2%.
• St. Louis Fed President Alberto Musalem noted that the labor market remains particularly tight and that it could take entire months or quarters before policies drag inflation back to the target levels.
• The US Dollar bulls remain on the defensive in the wake of the overnight decline in the US Treasury bond yields, lending some support to the non-yielding yellow metal amid absent relevant economic data. 

Technical Analysis: Gold price consolidates below 50-day SMA, $2,300 mark holds the key for bullish traders

From a technical perspective, bulls need to wait for a sustained strength beyond the 50-day Simple Moving Average (SMA) support breakpoint-turned-resistance, currently pegged near the $2,344-2,345 region, before placing fresh bets. The subsequent move up has the potential to lift the Gold price beyond the $2,360-2,362 supply zone, towards the $2,387-2,388 intermediate hurdle en route to the $2,400 mark. A sustained strength beyond the latter will negate any near-term negative outlook and allow the XAU/USD to aim back to retest the all-time peak, around the $2,450 area touched in May.

On the flip side, the $2,300 mark might continue to protect the immediate downside ahead of the $2,285 horizontal support. A convincing break below the latter should pave the way for the resumption of the recent pullback from the record high and drag the Gold price towards the next relevant support near the $2,254-2,253 region. The downward trajectory could extend further towards the $2,225-2,220 support before the commodity eventually drops to the $2,200 round-figure mark.