Gold remains below $2,400 mark, bulls not ready to give up amid geopolitical risks

• Gold price oscillates in a narrow band on Tuesday and remains close to the all-time peak.
• The worsening Middle East crisis weighs on investors’ sentiment and benefits the metal.
• Reduced Fed rate cut bets lift the USD to a fresh YTD top and cap gains for the XAU/USD.

Gold price (XAU/USD) oscillates in a narrow trading band heading into the European session on Tuesday and remains well within the striking distance of the all-time peak touched last week. The US Dollar (USD) climbs to its highest level since early November in the wake of expectations that the Federal Reserve (Fed) will delay cutting interest rates amid sticky inflation. The hawkish outlook remains supportive of elevated US Treasury bond yields and keeps a lid on any meaningful appreciating move for the non-yielding yellow metal.

The downside for the Gold price, however, remains cushioned on the back of persistent geopolitical tensions stemming from the ongoing conflicts in the Middle East, which tends to underpin demand for traditional safe-haven assets. This, in turn, suggests that the path of least resistance for the XAU/USD is to the upside and any meaningful corrective pullback might still be seen as a buying opportunity. Traders now look to the US macro data, along with speeches by influential FOMC members, including Fed Chair Jerome Powell, for a fresh impetus.

Daily Digest Market Movers: Gold price struggles to lure buyers amid mixed fundamental cues

• The global risk sentiment remains fragile amid the worsening Middle East crisis and speculations that the Federal Reserve will keep rates higher for longer, which, in turn, acts as a tailwind for the Gold price.
• Investors have been pushing back their expectations about the timing of the first interest rate cut by the Fed to September from June in the wake of concerns about sticky inflation and a resilient US economy.
• The bets were reaffirmed by stronger-than-expected US Retail Sales data released on Monday, which indicated that consumer spending remains strong and could underpin inflation in the coming months.
• The US Census Bureau reported that Retail Sales rose by 0.7% MoM in March as compared to consensus estimates for a 0.3% increase and the previous month’s upwardly revised growth of 0.9%.
• The yield on the benchmark 10-year US government bond shot to the highest level since November, though the disappointing release of the Empire State Manufacturing Index capped the upside.
• The US Dollar prolongs its recent upward trajectory and climbs to over a five-month peak, which might hold back bulls from placing fresh bets and keep a lid on any further gains for the XAU/USD.
• Tuesday’s US economic docket features the release of housing market data and Industrial Production figures, which along with Fedspeak, might provide some impetus to the non-yielding yellow metal.

Technical Analysis: Gold price bulls not ready to give up yet, $2,325-2,324  support holds the key

From a technical perspective, the overnight bounce validated the $2,325-2,324 support zone, which should now act as a key pivotal point. A convincing break below has the potential to drag the Gold price to the $2,300 round figure. Some follow-through selling will suggest that the precious metal has topped out in the near term and set the stage for some meaningful depreciating move towards the $2,220 zone with some intermediate support near the $2,250 region.

On the flip side, bulls might now wait for strength beyond the $2,400 mark before placing fresh bets and positioning for a move back towards retesting the record peak, around the $2,431-2,432 region touched last Friday. Given that the Relative Strength Index (RSI) on the daily chart is still flashing overbought conditions, the Gold price could pause near the all-time peak before resuming its recent well-established uptrend witnessed over the past three weeks or so.