Gold price consolidates as investors eye fresh development on Middle East tensions

• Gold price struggles for a direction as investors seek fresh development on Israel-Hamas conflicts and crucial US economic data.
• The US Dollar and bond yields drop as investors await US Q3 GDP and the Fed’s preferred inflation gauge.
• The US Manufacturing PMI is expected to remain below the 50.0 threshold for the 12th time in a row.

Gold price (XAU/USD) trades back and forth in a narrow range as investors seek fresh development over Israel-Palestine tensions. The US urges Israel’s military to delay a ground assault in Gaza, giving preference to hostage release operations and the dispatch of humanitarian aid for civilians. In addition to that, investors await the release of crucial economic indicators, which will shape the Federal Reserve’s (Fed) interest rate outlook.

The Gold price remains underpinned, on a broader note, as Israel continues with airstrikes in Gaza, which has resulted in more than 5K deaths and 15K casualties. Meanwhile, long-term bond yields and the US Dollar edge lower as investors hope that the Fed is done with hiking interest rates. Going forward, investors will focus on the Gross Domestic Product (GDP) data for the July-September quarter and the Fed’s preferred inflation gauge for September.

Daily Digest Market Movers: Gold price trades directionless ahead of S&P Global PMI data

• Gold price trades mixed around $1,980.00 as investors seek fresh development on the Israel-Palestine conflicts and crucial US economic readings this week.
• The broader outlook for the Gold price remains upbeat as Middle East tensions keep the safe-haven bid firmer. 
• The precious metal struggles to find a direction amid a delay in the ground assault plan by the Israeli military troops. The market participants anticipate that Israeli troops are preparing as much as possible before the ground attack on Gaza by dismantling Palestinian military positions.
• Meanwhile, the US has been urging Israel to delay a widely anticipated ground assault, thereby allowing more time for the release of hostages and the delivery of humanitarian aid for civilians.
• Long-term bond yields have edged down from multi-year highs of 5.02% as investors turn cautious ahead of a string of US economic indicators. 
• 10-year US Treasury yields have dropped to 4.81% as Federal Reserve policymakers continue to endorse no more interest rate hikes as higher yields are consistently impacting financial conditions.
• Fed policymakers conveyed that high bond yields have bought time for the central bank to assess the impact of interest rate hikes made so far.
• For more clarity on the Fed’s interest rate outlook, investors await a speech by Fed chair Jerome Powell, which is scheduled for Wednesday. 
• Last week, Jerome Powell kept hopes of further policy tightening alive if the US economy continues to remain resilient. He acknowledged that the labor demand has been upbeat and consumer spending has remained strong despite significant efforts to ease inflation by raising interest rates.
• Over the interest rate outlook, Powell said that further policy-tightening would be largely dependent on economic indicators, evolving outlook, and geopolitical tensions. 
• This week, the release of the Q3 GDP, Durable Goods Orders and core Personal Consumption Expenditure (PCE) price index for September will be keenly watched.
• Economists expect that the US economy to have grown by 4.2% on an annualized basis, doubling the growth rate of 2.1% in the former reading.
• Before the US GDP data, investors will focus on the S&P Global preliminary PMI data for October, which will be published at 13:45 GMT. As per the estimates, the Manufacturing PMI dropped to 49.5 against September’s reading of 49.8. The Services PMI is seen declining marginally below the 50.0 threshold to 49.9 versus the former release of 50.1.
• The US factory activities are expected to remain in the contracting phase for the 12th month in a row.
• The US Dollar Index (DXY) drops sharply to near 105.50 as the Fed is expected to keep interest rates unchanged in the 5.25-5.50% range in the November monetary policy meeting.
• As per the CME Fedwatch tool, traders see the Fed keeping interest rates unchanged at 5.25-5.50% almost certain. The odds of one more interest rate increase in any of the two remaining monetary policy meetings in 2023 remain around 24%.

Technical Analysis: Gold price trades mixed around $1,980

Gold price demonstrates a volatility contraction near $1,980.00 ahead of crucial US economic data. The precious metal turns sideways after failing to extend upside above the $2,000 psychological resistance barrier. The 20 and 50-day Exponential Moving Averages (EMAs) have delivered a bullish crossover above the 200-day EMA, which warrants more upside.