Gold price rebounds from two-week low amid softer USD, US PCE eyed for fresh impetus

• Gold price plunged to over a two-week low in reaction to the upbeat US macro data on Thursday.
• September Fed rate cut bets keep the USD bulls on the defensive and help limit any further losses.
• Traders also prefer to wait for the release of the US PCE Price Index before placing directional bets.

Gold price (XAU/USD) witnessed heavy selling following the release of the upbeat US macro data and dived to its lowest level in over two weeks on Thursday. The Advance Gross Domestic Product (GDP) estimate showed that the US economy expanded at a faster-than-expected pace and that inflation slowed during the second quarter of 2024. This, in turn, suggested that the US economy is still holding up well and infused some stability in the financial markets, which, in turn, weighed on the traditional safe-haven precious metal.

The optimism keeps the Gold price on the defensive during the Asian session on Friday, though expectations for an imminent start of the Federal Reserve's (Fed) rate-cutting cycle help limit the downside. Traders also seem reluctant and prefer to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index later this Friday before placing directional bets. The crucial inflation data will play a key role in determining the Fed's policy path, which, in turn, will drive the US Dollar (USD) and the non-yielding yellow metal.

Daily Digest Market Movers: Gold price attracts some buyers amid dovish Fed-inspired modest USD weakness

• The US Bureau of Economic Analysis reported on Thursday that the economy grew at a 2.8% annualized pace during the April-June period as compared to the 1.4% rise in the previous quarter and 2% anticipated. 
• Further details revealed that the core Personal Consumption Expenditures Price Index – the Federal Reserve's preferred inflation gauge – decelerated to 2.9% from the 3.7% increase registered in the first quarter.
• Separately, data published by the US Department of Labor (DoL) showed that the number of individuals who filed for unemployment insurance benefits fell more-than-expected, to 235K in the week ending July 20. 
• Investors cheered the US economic resilience and dented demand for traditional safe-haven assets, which, in turn, exerted heavy downward pressure on the Gold price and dragged it to the lowest level since June 9.
• The markets, meanwhile, have fully priced in a September Fed rate cut move and anticipate two more rate cuts by year-end, keeping the US Dollar on the defensive and lending support to the non-yielding yellow metal.
• Traders now look forward to the release of the June US PCE Price Index for more cues about the Fed's policy/rate-cut path before determining and positioning for the next leg of a directional move for the XAU/USD. 

Technical Analysis: Gold price needs to find acceptance below 50-day SMA for bears to seize near-term control

From a technical perspective, the Gold price showed some resilience below the 50-day Simple Moving Average (SMA) for the second straight day on Friday and for now, seems to have snapped a two-day losing streak. Hence, some follow-through selling below the overnight swing low, around the $2,353 area, is needed to support prospects for an extension of the recent corrective decline from the all-time peak touched last week. 

Meanwhile, oscillators on the daily chart have just started gaining negative traction, suggesting that the path of least resistance for the XAU/USD is to the downside and that any further recovery is likely to attract fresh sellers near the $2,380 region. The next relevant hurdle is pegged near the $2,391-2,392 zone ahead of the $2,400 mark, above which a fresh bout of a short-covering should lift the metal towards the weekly top, around the $2,432 region.

On the flip side, acceptance below the 50-day SMA and a subsequent break through the $2,350 support, will be seen as a fresh trigger for bearish traders. The Gold price might then aim to challenge the 100-day SMA, currently pegged near the $2,325-2,324 region. The latter should act as a key pivotal point, which if broken should pave the way for a slide towards testing sub-$2,300 levels, or June monthly swing lows.