Gold price stands firm near two-week high on dovish Fed expectations, ahead of US CPI

• Gold price builds on its recent recovery from a multi-month low and climbs to a two-week high.
• Geopolitical tensions, sliding bond yields and a softer USD continue to lend support to the metal.
• The US CPI report could offer fresh cues about the Fed’s rate-hike path and provide some impetus.

Gold price (XAU/USD) climbs to a fresh two-week high during the Asian session on Thursday and seems poised to prolong its recent strong recovery move from the $1,810 area, or a seven-month low touched last week. As geopolitical tensions flare in the Middle East, the precious metal has regained its status as a safe haven of choice and draws additional support from the recent US Dollar (USD) decline. Apart from this, falling global bond yields turn out to be another factor benefiting the non-yielding yellow metal and fuelling the rally.

With the latest leg up, the Gold price has now recovered over 30% of its losses registered in September and the positive move seems rather unaffected by a generally positive tone around the equity markets. This, along with speculations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle, suggests that the path of least resistance for the XAU/USD remains to the upside. Traders, however, might prefer to wait for the latest consumer inflation figures from the United States (US), due later during the North American session.

Daily Digest Market Movers: Gold price remains supported by geopolitical tensions, dovish Fed

• The conflict between Israel and Palestinian Islamist group, Hamas, continues to drive haven flows towards the Gold price.
• Federal Reserve officials suggested that the recent surge in Treasury yields might make further rate hikes less necessary.
• Fed Governor Christopher Waller said on Wednesday that higher market rates may let policymakers "watch and see".
• The US PPI increased more than expected in September, though the underlying inflationary pressure continued to abate.
• Investors seem convinced that the Fed is nearing the end of its policy-tightening cycle and that interest rates have peaked.
• The yield on the benchmark 10-year US Treasury note retreated further from the highest levels since 2007 touched last week.
• The US Dollar moves further away from the 11-month high and turns out to be another factor underpinning the XAU/USD.
• The minutes from the September FOMC meeting showed that most Fed members backed the case for one more rate hike.  
• Market participants now look to the latest US consumer inflation figures for cues about the Fed's future rate-hike path.
• The headline CPI is expected to have slowed to 0.3% in September and the yearly rate is seen ticking down to 3.6%.
• The more closely watched Core CPI is forecast to have remained steady at a 0.3% monthly pace and come in at 4.1% YoY.
• The crucial CPI report will influence the Fed's next policy move and provide a fresh directional move to the commodity.

Technical Analysis: Gold price is more likely to confront stiff resistance near $1,900 mark

The overnight sustained move beyond the $1,865-1,866 horizontal barrier might have already set the stage for additional gains towards the next relevant hurdle near the $1,885 region. Meanwhile, technical indicators on the daily chart – though have recovered from the negative territory – are yet to confirm a bullish bias. Hence, any subsequent move up is more likely to confront stiff resistance and remain capped near the $1,900 round-figure mark. Some follow-through buying, however, will be seen as a fresh trigger for bullish traders and allow the Gold price to challenge the 200-day SMA, currently pegged near the $1,928-1,930 region.

On the flip side, the $1,866-1,865 resistance breakpoint might now protect the immediate downside ahead of the $1,853-1,850 region. The next relevant support is pegged near the $1,835-1,833 zone, representing a multi-day-old trading range resistance breakpoint. A convincing break below the latter will negate any near-term positive outlook and make the Gold price vulnerable to retest the multi-month low, around the $1,810 zone touched last week.