Gold price extends the range play amid uncertainty over Fed rate cut path

Gold price (XAU/USD) continues with its struggle to gain any meaningful traction on Friday and remains confined in a familiar trading range held since the beginning of this week.

Technical Overview

From a technical perspective, the range bound price action points to indecision among traders over the near-term trajectory for the Gold price. Moreover, neutral oscillators on the daily chart warrant some caution before placing aggressive bets. In the meantime, the $2,022-2,020 area might continue to protect the immediate downside ahead of the weekly low, around the $2,015 region. Some follow-through selling will expose the $2,000 psychological mark, below which the Gold price could accelerate the slide towards the 100-day Simple Moving Average (SMA), currently around the $1,987 zone. The downfall could extend further towards the very important 200-day SMA, near the $1,966-1,965 region.

On the flip side, the weekly swing high, around the $2,044-2,045 area, is likely to act as an immediate barrier ahead of the $2,054-2,055 zone and the $2,065 region, or the monthly peak. A sustained strength beyond the latter has the potential to lift the Gold price back towards the YTD peak, near the $2,078-2,079 touched in January. The subsequent move-up should allow the XAU/USD to reclaim the $2,100 mark and climb further to the next relevant hurdle near the $2,120 region.

Fundamental Overview

Gold price (XAU/USD) continues with its struggle to gain any meaningful traction on Friday and remains confined in a familiar trading range held since the beginning of this week. The incoming stronger US macro data, along with hawkish remarks by a slew of influential FOMC members, suggested that the Federal Reserve (Fed) will keep interest rates higher for longer. This, along with an extension of the risk-on rally across the global equity markets, turns out to be a key factors acting as a headwind for the safe-haven precious metal.

The US Dollar (USD), however, extends its consolidative price move below its highest level in almost three months amid the uncertainty over the Fed's rate-cut path. This is holding back traders from placing aggressive directional bets around the Gold price. Investors also prefer to wait for the release of the latest US consumer inflation figures next week, which might offer some clarity about the likely timing and the pace of rate cuts by the Fed in 2024. This will drive the USD demand and provide some meaningful impetus to the non-yielding yellow metal.