Gold price remains close to record peak, lacks bullish conviction amid mixed cues

• Gold price attracts some haven flows amid the risk-off mood and Middle East tensions.
• A modest USD downtick further benefits the XUA/USD, though the upside seems limited.
• Bets for smaller rate cuts by the Fed should limit the USD losses and cap the yellow metal.

Gold price (XAU/USD) edges higher for the second straight day on Wednesday – also marking the fourth day of a positive move in the previous five – and touches a one-and-half-week high, around the $2,670 region during the Asian session. Retreating US Treasury bond yields drags the US Dollar (USD) away from over a two-month peak touched earlier this week and turns out to be a key factor underpinning the commodity. Furthermore, a turnaround in the global risk sentiment – as depicted by a weaker tone across the global equity markets – drives some haven flows towards the precious metal amid persistent geopolitical risks. 

Adding to this, elevated demand from central banks offers additional support to the Gold price. That said, firming expectations for a less aggressive policy easing by the Federal Reserve (Fed) and bets for a regular 25 basis points (bps) rate cut in November should limit any meaningful USD corrective decline. This, in turn, might hold back bulls from placing fresh bets around the non-yielding yellow metal. Moreover, reports that Israel will refrain from targeting Iran’s oil and nuclear sites might contribute to capping gains for the XAU/USD, warranting some caution before positioning for any further near-term appreciating move.

Daily Digest Market Movers: Gold price benefits from softer risk tone, modest USD downtick

• US Treasury bond yields fell for a second day on Tuesday as traders reacted to weaker-than-expected manufacturing data and easing inflation risks on the back of fall oil prices, boosting demand for the non-yielding Gold price. 
• The New York Federal Reserve’s Empire State Manufacturing Index fell following a surge to a 29-month high in September, to -11.9 in October, marking the weakest reading since May and indicating deteriorating conditions.
• Easing fears of a supply disruption, along with a weaker demand outlook, drag Crude Oil prices to a two-week low, which is expected to reduce inflationary pressures and allow the US central bank to cut interest rates further. 
• The markets, however, are pricing in a greater possibility of a smaller interest rate cut at the next FOMC policy meeting in November, which should underpin the US Dollar and keep a lid on any further gains for the XAU/USD. 
• Meanwhile, San Francisco Fed President Mary Daly noted on Tuesday that the US central bank has made significant progress on tamping down inflation and sees one or two more rate cuts this year if economic forecasts are met.
• Separately, Atlanta Fed President Raphael Bostic said that he doesn’t see strong signs of a potential recession looming over the horizon as the US economy continues to perform well and that the inflation is heading back to 2%.
• On Tuesday, Israeli Prime Minister Benjamin Netanyahu rejected the idea of a ceasefire in Lebanon, while the militant group Hezbollah threatened to widen its attacks, raising the risk of a further escalation of the conflict. 
• The Biden administration has warned Israel that it faces possible punishment, including the potential stopping of US weapons transfers if it does not take immediate action to let more humanitarian aid into Gaza.
• The market attention will be on the US economic releases – Monthly Retail Sales, Industrial Production, and the usual Weekly Initial Jobless Claims – and the Chinese macro data dump due later this week.

Technical Outlook: Gold price seems poised to surpass the all-time peak and conquer $2,700

From a technical perspective, any subsequent move up is likely to confront some resistance near the $2,685-2,686 region, or the 
all-time peak touched in September. This is closely followed by the $2,700 round-figure mark, which if cleared decisively will set the stage for an extension of a well-established multi-month-old uptrend amid positive oscillators on the daily chart. 

On the flip side, immediate support is pegged near the $2,650 area, below which the Gold price could slide to the $2,632-2,630 region. Any further decline is likely to attract some buyers and remain limited near the $2,600 round-figure mark. The latter should act as a key pivotal point, which if broken decisively might prompt some technical selling and pave the way for deeper losses.