Gold price remains in tight range ahead of Biden’s visit to Israel

• Gold price trades in a narrow range as investors digest tensions in the Middle East.
• Fed policymakers see interest rates as sufficiently restrictive due to higher US Treasury yields.
• US Retail Sales growth is seen slowing to 0.3% in September.

Gold price (XAU/USD) trades directionless ahead of US President Joe Biden’s visit to Israel amid deepening Middle-East tensions and the speech from Federal Reserve (Fed) Chair Jerome Powell, which is expected to provide significant guidance on interest rates. Investors hope that Powell will favor a neutral monetary policy and join other Fed officials who recently said higher bond yields are sufficient to tame inflation.

Before key events in the economic calendar and the geopolitical front, investors will watch the United States Retail Sales data for September, which is one main gauge of consumer spending, the main driver of the US economy. Investors expect sales to grow at a slower pace than the previous month despite higher gasoline prices (Retail Sales data aren’t adjusted for inflation and thus reflect price changes). The volatility in the US Dollar is expected to diminish ahead of Retail Sales data. 

Daily Digest Market Movers: Gold price juggles ahead of US Retail Sales data

• Gold price consolidates in a tight range around $1,920.00 as investors await the speech from Federal Reserve Chair Jerome Powell, which is scheduled for Thursday.
• The speech from Powell will provide meaningful cues about the upcoming interest rate decision, set for November 1.
• Investors will watch whether Powell joins other Fed officials and supports keeping interest rates unchanged for the second time in a row due to rising US Treasury yields. 
• The 10-year US Treasury yields are hovering near multi-year highs at 4.75% and Fed policymakers are of the view that higher yields are sufficient to ease overall spending and investment.
• San Francisco Fed President Mary Daly suggested that the recent surge in long-term bond yields is equivalent to one 25 basis points rate hike. The risk of lifting interest rates further could push the economy into a recession. 
• Philadelphia Fed Bank President Patrick Harker said Monday that the central bank should not build new pressures on the economy by increasing borrowing costs further. Harker reiterated that the Fed is done hiking interest rates in an environment where inflationary pressures are ebbing.
• Harker pointed out that the economy is resilient due to a stabilizing labor market and easing inflation, but warned that first-time homebuyers have vanished from the market due to higher interest rates.
• As per the CME Group Fedwatch tool, traders see a 90% chance of the Fed keeping interest rates unchanged at 5.25%-5.50%. The odds of one more interest rate increase in any of the two remaining monetary policy meetings in 2023 are unchanged at 30%.
• Apart from the Fed policy, US President Joe Biden’s visit to Israel amid the deepening conflict in the region is likely to keep the market on edge. Further escalation in the Israel-Hamas war would improve the appeal for Gold.
• US Secretary of State Antony Blinken confirmed that President Biden will visit Israel on Wednesday, emphasizing the need to save civilians. Meanwhile, Israel is preparing for the ground offensive in Gaza against Hamas. 
• The US Dollar index (DXY) finds buying interest near 106.20. A sideways move is anticipated ahead of the Retail Sales data for September. Analysts at SocGen expect a mild 0.3% MoM increase for Retail Sales for the aggregate but note that higher gasoline prices are partially responsible for the gain.
• Higher-than-expected consumer spending figures could lift chances of more interest rate increases from the Fed.

Technical Analysis: Gold price oscillates near $1,920

Gold price trades sideways near $1,920.00 ahead of multiple events. The precious metal has turned directionless after a sharp upside move to near an almost four-week high at $1,932.00. The yellow metal has climbed above all short-term Exponential Moving Averages (EMAs), indicating that the overall trend is bullish. Momentum oscillators have also shifted into the bullish range, which suggests an increasing likelihood of an upward price move.