Gold price consolidates in range around $2,500, bulls not ready to give up just yet

• The price of gold remains range bound as bulls await more clues on the Fed’s rate cut trajectory.
• Dovish Fed expectations pull USD to multi-month low and provide support for XAU/USD.
• Hopes for a cease-fire deal in Gaza continue to support bullish sentiment and limit upside.

The price of gold (XAU/USD) posted modest losses on Monday as investors refrained from placing new bullish bets following the recent rally to a new record and opted to wait for more clues on the Federal Reserve’s policy path ( Fed). Therefore, the focus will remain on the release of the minutes of the July FOMC meeting on Wednesday and Fed Chairman Jerome Powell’s speech at the Jackson Hole Symposium on Friday. Powell’s comments will be closely watched for some clues about the expected path of interest rate cuts. This, in turn, will play a key role in influencing the price dynamics of the US dollar (USD) in the near term and determining the next stage of a directional move for the non-yielding yellow metal.

Meanwhile, growing acceptance that the Fed will begin its policy easing cycle in September amid signs of cooling inflation is pushing the USD Index (DXY), which tracks the greenback against a basket of currencies, to the lowest level since January. Apart from this, the risk of further escalation of geopolitical tensions in the Middle East and the protracted Russia-Ukraine war act as a tailwind for gold prices. That said, the prevailing risk-on mood, along with hopes for a cease-fire in Gaza, could keep a lid on any significant upside for XAU/USD. However, the fundamental backdrop appears tilted in favor of the bulls, suggesting that any significant corrective slide could be seen as a buying opportunity.

Daily Digest Market Movers: Gold traders await more clues on Fed rate cut path before placing new bets

• The price of gold is extending the sideways price movement of the consolidation near the record high, as traders move on the sidelines and wait for more clues from the Federal Reserve before positioning for the next step of a directional move.
• The minutes of the FOMC’s July meeting, scheduled to be released on Wednesday, and Fed Chairman Jerome Powell’s appearance on Friday will be watched for signs of the possibility of a bigger rate cut in September.
• Market participants trimmed their bets on more aggressive policy easing by the Fed after last week’s upbeat retail sales report for July eased concerns about a possible recession in the world’s largest economy. world.
• Meanwhile, CME Group’s FedWatch tool indicates a higher chance that the Fed will begin its policy easing cycle at the September meeting and cut borrowing costs by more than 200 basis points by the end of 2025.
• Minneapolis Fed President Neel Kashkari said Monday that a debate about a potential rate cut in September was appropriate as the balance of risks shifted more toward the labor market.
• Chicago Fed President Austan Goolsbee said the U.S. economy shows no signs of overheating, so central bank officials should be careful about keeping tight monetary policy in place longer than necessary.
• In addition, San Francisco Fed President Mary Daly downplayed concerns about a sharp slowdown in the US economy, although she said the US central bank needed to take a gradual approach to reducing borrowing costs.
• On the geopolitical front, US Secretary of State Antony Blinken said Israeli Prime Minister Benjamin Netanyahu had accepted a proposal to address disagreements blocking the hostage release deal with Hamas.
• Negotiations are expected to resume this week, fueling optimism that a ceasefire will reduce Middle East tensions and the possibility of regional conflict, further boosting investor appetite for riskier assets.

Technical Analysis: Gold price looks set to appreciate further, breaking above $2,470-$2,472 resistance

From a technical perspective, price action within the range could still be classified as a bullish consolidation phase ahead of the next leg. The constructive outlook is reinforced by the fact that the oscillators on the daily chart are holding in positive territory and are still far from being in the overbought zone. That said, bulls need to wait for further buying beyond Friday’s all-time high around the $2,509-$2,510 area before positioning for any further short-term appreciation moves.

On the other hand, the horizontal resistance break point at $2,472-2,470 now seems to protect the immediate downside. Any further decline is likely to attract new buyers and remain limited near the $2,448-$2,446 region. The latter should act as a key pivotal point which, if decisively broken, should pave the way for deeper losses. Gold price could then accelerate the corrective decline further below the $2,400 level towards the 50-day simple moving average (SMA) support near the $2,392 area.