Gold clings to modest recovery gains; lacks follow-through amid mixed cues

• Gold price stages a solid bounce from over a two-week low touched earlier this Monday.
• Retreating US bond yields and Fed rate cut bets benefit the non-yielding yellow metal.
• A modest USD uptick and a positive risk tone cap any meaningful gains for the commodity.

Gold (XAU/USD) struggles to capitalize on its goodish intraday recovery from a two-week low touched earlier this Monday and trades with modest gains around the $3,350 area during the first half of the European session. The US Dollar (USD) kicks off the new week on a positive note amid diminishing odds for a more aggressive policy easing by the Federal Reserve (Fed). This, along with the risk-on environment, turns out to be a key factor acting as a headwind for the safe-haven precious metal.

Meanwhile, investors remain on edge ahead of US President Donald Trump’s meeting with Ukrainian President Volodymyr Zelenskiy and European leaders to discuss a peace deal with Russia. Furthermore, the growing acceptance that the Fed will resume its rate-cutting cycle in September might hold back the USD bulls from placing aggressive bets. This might continue to offer some support to the non-yielding Gold and warrants some caution before positioning for any meaningful downside.

Daily Digest Market Movers: Gold price sticks to positive bias as Fed rate cut bets offset risk-on mood

• Traders now seem convinced that the US Federal Reserve will lower borrowing costs at its September meeting. Moreover, the CME Group’s FedWatch Tool indicates the possibility of at least two 25-basis-point Fed rate cuts by the end of this year.
• Ukrainian President Volodymyr Zelensky will meet US President Donald Trump for bilateral talks on Monday. Later, the key European leaders will be joining a larger conversation to discuss a peace deal to end Europe’s deadliest war in 80 years.
• Data released last Thursday showed that US producer prices rose in July at the fastest monthly pace since 2022 and tempered bets for a jumbo 50 bps interest rate cut by the Fed. This assists the US Dollar in attracting some buyers at the start of a new week.
• Meanwhile, the preliminary data from the University of Michigan showed that the one-year inflation expectations climbed to 4.9% from 4.5% and the five-year forecast increased to 3.9% from 3.4%, indicating a gain of momentum in price pressures.
• Additional details showed that the US Consumer Sentiment Index unexpectedly dropped to 58.6 in August from 61.7 in the previous month, signalling a poor backdrop in public confidence. Moreover, the Expectations Index eased to 57.2 from 57.7.
• Earlier, the US Census Bureau reported on Friday that the US Retail Sales increased by 0.5% on a monthly basis in July. This followed the 0.9% rise (revised up from 0.6%) recorded in the previous month and matched consensus estimates.
• Traders now look forward to the release of the FOMC meeting Minutes on Wednesday and Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium during the latter part of the week for more cues about the near-term rate-cut path.
• Apart from this, geopolitical developments will play a key role in influencing demand for traditional safe-haven assets and provide some meaningful impetus to the Gold price.

Gold needs to surpass the $3,358 hurdle to back the case for a further intraday appreciating move

An intraday bounce from the 61.8% Fibonacci retracement level of the upswing from the July monthly low and a subsequent move beyond the 200-period Simple Moving Average (SMA) on the 4-hour chart favor the XAU/USD bulls. Moreover, oscillators on the said chart have again started gaining positive traction and back the case for a further intraday appreciating move. Some follow-through buying beyond the $3,355 area, or the 50% retracement level, will reaffirm the positive outlook and lift the Gold price to the next relevant hurdle near the $3,372-3,374 region, or the 23.6% Fibo. retracement level. The momentum could extend further and allow the commodity to reclaim the $3,400 mark before aiming to test the monthly peak, around the $3,408-3,410 area.

On the flip side, the 200-SMA on H4, around the $3,346 region, now seems to protect the immediate downside ahead of the $3,324-3,323 zone, or the 61.8% Fibo. retracement level. Failure to defend the said support levels could make the Gold price vulnerable to weaken further towards the $3,300 round figure en route to the $3,283-3,282 horizontal zone and the $3,268 region, or the late June swing low.