Gold edges higher in a familiar trading range, manages to hold above $2,150 level

• Gold price lacks any firm near-term direction amid the uncertainty over the Fed’s rate-cut path.
• Geopolitical risk, along with the risk-off impulse, lends some support to the safe-haven metal.
• Traders now look to the US macro data for some impetus ahead of next week’s FOMC meeting.

Gold price (XAU/USD) came under some renewed selling pressure on Thursday and dropped back closer to the weekly low in reaction to the hotter-than-expected US Producer Price Index (PPI). The data pointed to still-sticky inflation and cooled market expectations for early interest rate cuts by the Federal Reserve (Fed). This, in turn, triggered a fresh leg up in the US Treasury bond yields and boosted the US Dollar (USD), which turned out to be a key factor that drove flows away from the non-yielding yellow metal.

The markets, however, are still pricing in a greater chance that the US central bank will start cutting interest rates in June. This, along with the risk-off impulse, assisted the Gold price to attract some buyers ahead of the $2,150 level and gain follow-through traction during the Asian session on Friday. The XAU/USD, meanwhile, remains confined in a familiar range as traders seek more clarity about the Fed’s rate-cut path before placing fresh directional bets. Hence, the focus remains glued to the FOMC meeting next week.

• Data released on Thursday showed that the US producer prices increased more than expected in February, which might force the Federal Reserve to keep interest rates elevated and prompt some selling around the Gold price.
• The US Bureau of Labor Statistics reported that the Producer Price Index for final demand rose by a 1.6% YoY rate in February as compared to the previous month’s upwardly revised print of 1% and the 1.1% market estimates.
• Separately, the US Department of Labor (DOL) published the usual Initial Jobless Claims data, which showed that the number of individuals filing for unemployment insurance for the first time unexpectedly fell to 209K last week.
• This, to a larger extent, overshadowed softer US Retail Sales figures, which rose by 0.6% in February and pointed to a slowdown in consumer spending during the first quarter amid rising inflation and high borrowing costs.
• Meanwhile, the CME Group’s FedWatch Tool indicates that the markets are still pricing in about a 60% chance that the Fed will cut interest rates at the June policy meeting, helping limit losses for the non-yielding yellow metal.
• Investors turn more cautious over the possibility of more hawkish signals from the Fed, which is evident from a generally weaker tone around the equity markets and lends additional support to the safe-haven XAU/USD.
• Russia moved tactical nuclear weapons from its borders into neighbouring Belarus, closer to NATO territory, after President Vladimir Putin threatened a wider military showdown with NATO over the alliance’s backing for Ukraine.
• Traders now look to Friday’s US economic docket – featuring the release of the Empire State Manufacturing Index, Industrial Production figures and the Preliminary University of Michigan Consumer Sentiment Index.
• The focus, however, will remain glued to the upcoming FOMC monetary policy meetings, starting next Tuesday, which might provide fresh cues about the Fed’s rate-cut path and determine the near-term trajectory for the metal.

From a technical perspective, the range-bounce price action since the beginning of the current week comes on the back of the recent blowout rally and might still be categorized as a bullish consolidation phase. The lower boundary of the said trading range near the $2,152-2,150 area might continue to protect the immediate downside. A convincing break below could drag the Gold price to the next relevant support near the $2,128-2,127 zone. The corrective slide could extend further towards the $2,100 round figure, which should act as a strong base for the XAU/USD.

On the flip side, the $2,178-2,180 region now seems to have emerged as an immediate strong barrier, which if cleared should allow the Gold price to challenge the record peak, around the $2,195 area touched last week. Some follow-through buying beyond the $2,200 mark will be seen as a fresh trigger for bullish traders and set the stage for the resumption of a well-established uptrend witnessed since the beginning of this month.