XAU/USD looks for more US data for fresh directional momentum

• The price of gold remains capped below the key resistance of $2,670, despite the escalation of the Israel-Iran conflict.
• The US dollar rises on reduced bets for a Fed rate cut in November.
• Gold price may struggle for upbeat traction ahead of top US economic data, Fedspeak.

The price of gold is trading flatly in a tight range below the key static resistance at $2,670, lacking clear directional momentum so far on Thursday. Focus now turns to a fresh batch of US economic statistics and speeches from Federal Reserve (Fed) policymakers for new directives amid escalating geopolitical conflict between Israel and Iran.

The price of gold is divided between the problems in the Middle East and lower bets on a Fed rate cut

Several media outlets reported that Israel responded harshly to the recent Iranian attack by shelling downtown Beirut in the early hours of Thursday. Lebanese security officials said three rockets also hit the southern suburb of Dahiyeh, where Hezbollah leader Hassan Nasrallah was killed. Lebanese health officials also reported that several people were injured in the Israeli attack in Beirut.

Iranian forces used hypersonic Fattah missiles for the first time on Tuesday and 90 percent of its missiles successfully hit their targets in Israel. Tehran said the attack was in response to Israel’s killing of militant leaders and aggression in Lebanon against the Iran-backed armed movement Hezbollah in Gaza as well.

Despite growing risks of the Israel-Iran conflict turning into a wider regional war in the Middle East, gold prices are struggling to capitalize on risk-off flows as the odds of a 50 basis point interest rate cut (bps) by the Fed in November keeps sentiment around the US dollar underpinned by the price of non-interest bearing gold.

Data on Wednesday showed U.S. ADP private sector employment rose by 143,000 jobs for September, accelerating from an upwardly revised 103,000 in August and better than the estimate of 120,000. A strong ADP jobs report eased concerns about the health of the US labor market, supporting expectations for Friday’s non-farm payrolls data.

Markets are currently pricing in about a 34 percent chance the Fed will opt for a big rate cut at its next meeting, compared with nearly 60 percent last week, CME Group’s FedWatch Tool shows.

The next focus for gold traders remains the US ISM services PMI and weekly jobless claims data for fresh signals on the health of the economy and the Fed’s next interest rate move. Fedspeak will also be closely watched and will likely have a significant impact on the valuation of the US dollar, ultimately influencing gold price action.

Gold Price Technical Analysis: Daily Chart

The daily technical setup for the gold price remains constructive as long as the 14-day Relative Strength Index (RSI) remains in bullish territory. The leading indicator is currently trading near 66.50.

Gold price needs to produce a daily candlestick close above static resistance near $2,670 for renewed upside. The next resistance is lined up at the record high of $2,686.

Next, buyers will target the $2,700 round level, followed by rising trendline resistance at $2,740.

Alternatively, if gold sellers flex their muscles, acceptance below the September 24 low of $2,623 is essential to unleash further downside towards the $2,600 mark.

Gold sellers could then challenge the September 20 low of $2,585, where the 21-day simple moving average (SMA) remains around.