Gold flat lines below one-week high set on Tuesday amid mixed cues

• Gold price consolidates its weekly gains registered over the past two days amid mixed cues.
• A modest USD uptick and a positive risk tone seem to act as a headwind for the commodity.
• Fed rate cut bets should cap the USD and support the XAU/USD pair amid trade uncertainties.

Gold price (XAU/USD) extends its sideways consolidative price move heading into the European session on Wednesday and trades below a one-week high touched the previous day. The US Dollar (USD) gains some positive traction and moves away from its lowest level since February 2022 touched on Tuesday, which, in turn, caps the commodity’s goodish recovery from a nearly one-month low set earlier this week. Apart from this, a generally positive risk tone is seen as another factor acting as a headwind for the safe-haven precious metal.

The upside for the USD, however, remains capped on the back of the growing acceptance that the US Federal Reserve (Fed) will resume its rate-cutting cycle in the near future. Apart from this, concerns about the worsening US fiscal condition should keep a lid on any meaningful USD appreciation, which, in turn, offers some support to the Gold price. Traders also seem reluctant and opt to wait for the release of the jobs report on Thursday for cues about the Fed’s rate-cut path, which will drive the USD and the non-yielding yellow metal.

Daily Digest Market Movers: Gold price struggles to lure buyers amid modest USD strength

• The US Dollar stages a modest bounce from over a three-and-a-half-year low touched on Tuesday and fails to assist the Gold price to build on a two-day-old recovery from a nearly one-month low touched earlier this week.
• Comments from Federal Reserve Governor Michelle Bowman and fellow Governor Christopher Waller suggested that the US central bank could consider cutting interest rates as early as the July monetary policy meeting.
• Meanwhile, Fed Chair Jerome Powell said on Tuesday that the US central bank would have eased monetary policy by now if not for the highly uncertain economic path created by US President Donald Trump’s tariff policies.
• When asked if July would be too soon for markets to expect a rate cut, Powell answered that it’s going to depend on the data. Nevertheless, traders are pricing in over a 20% chance that the Fed will cut rates at the July meeting.
• More significantly, there is a nearly 75% probability of a 25 basis point rate reduction by the Fed at the September monetary policy meeting. This caps any further USD recovery and supports the non-yielding yellow metal.
• On the economic data front, the Institute of Supply Management (ISM) reported on Tuesday that economic activity in the US manufacturing sector contracted for the fourth consecutive month, though at a slower pace in June.
• Separately, the Job Openings and Labor Turnover Survey (JOLTS) revealed that the number of job openings stood at 7.769 million on the last business day of May, up from 7.395 million in April and 7.3 million anticipated.
• Wednesday’s US economic docket features the release of the ADP report on private-sector employment, which might influence the USD and the XAU/USD pair ahead of the official Nonfarm Payrolls (NFP) report on Friday.
• Trump threatened to impose higher tariffs on Japanese imports over the latter’s alleged unwillingness to buy American-grown rice. This comes ahead of the July 9 deadline for Trump’s reciprocal tariffs and fuels uncertainty.

Gold price constructive technical setup favors bulls and backs the case for further gains

Bulls might now wait for a move beyond the overnight swing high, around the $3,358 region, before placing fresh bets around the Gold price. The subsequent move up should allow the commodity to reclaim the $3,400 round-figure mark. A sustained strength beyond the latter would negate any near-term negative outlook and shift the bias in favor of the XAU/USD bulls.

On the flip side, weakness below the $3,329-3,328 region (Asian session low) could find support near the $3,300 mark. This is followed by the $3,277-3,276 horizontal zone and the weekly trough, around the $3,246-3,245 region. A convincing break below the latter would make the Gold price vulnerable to accelerate the fall to the $3,210-$3,200 support en route to the $3,175 area.