Gold price struggles for a firm intraday direction amid mixed Fed rate cut cues

Gold price lacks any firm intraday direction and is influenced by a combination of diverging forces. A slew of Fed officials push back against bets for early rate cuts and cap the upside for the metal. Geopolitical risks continue to act as a tailwind as traders look to the US PCE Price Index on Friday.

Technical Overview

Technically, nothing seems to have changed for the Gold price, as the path of least resistance still appears to the upside.

The 14-day Relative Strength Index (RSI) indicator continues to trade above the midline while Gold price defends the 21-day Simple Moving Average (SMA) at $2,016.

A daily closing below the latter is needed to snap the recovery mode, turning south toward the $2,000 threshold. The next downside cap is envisioned at the 50-day SMA at $1,986.

On the flip side, acceptance above the $2,040-$2,050 region is critical for the Gold price to regain its upside traction toward the $2,100 psychological level. Further up, Gold buyers would look to take out the all-time highs of $2,144.

Fundamental Overview

The Bank of Japan (BoJ) made no changes to its ultra-loose policy settings, as well as, the forward guidance on monetary policy after it concluded its two-day policy review meeting on Tuesday. The USD/JPY pair rallied hard, as the Japanese Yen succumbed to the dovish policy announcement. However, the USD/JPY upsurge is having a limited impact on the US Dollar so far.

Hence, Gold price keeps its sideways trading momentum intact, with the focus shifting toward the US Housing data and any speeches from the US Federal Reserve (Fed) policymakers later in the day. In the meantime, the subdued price action seen in the US Dollar and the US Treasury bond yields could keep the bright metal supported.

Gold price also seeks support from the ongoing geopolitical tensions in the Middle East. Yemen's Iran-backed Houthi rebels launched a series of drone and ballistic missile attacks on ships in the southern Red Sea, which are a response to Israel's assault on the Gaza Strip. Meanwhile, Israelis continued to strike the Gaza Strip overnight, leading to more Palestinian casualties. 

However, further upside in Gold price appears elusive, as the Fed policymakers continue to push back against market expectations of aggressive rate cuts next year. Cleveland Fed President Loretta Mester told the Financial Times on Monday that markets are a 'bit ahead' of the Fed on rate cuts.

Chicago Fed President Austan Goolsbee spoke about the market’s reaction to last week’s policy announcements on CNBC’s “Squawk Box.” Goolsbee said, “I was confused a bit — was the market just imputing, here’s what we want them to be saying?”