Gold price sees modest increase within consistent trading range, stays under 50-day SMA

• Gold price draws some support from escalating geopolitical tensions in the Middle East.
• Sliding US bond yields also benefit the XAU/USD, though a further upside seems limited.
• Traders might further wait on the sidelines ahead of the FOMC decision on Wednesday.

Gold price (XAU/USD) is off to a strong start on the first day of the week, with a steady climb during the early European session. Breaking through the 50-day Simple Moving Average (SMA) barrier, the precious metal is showing positive momentum. However, bullish traders are advised to wait for a move beyond the $2,040-2,042 supply zone before anticipating further gains ahead of the upcoming FOMC decision on Wednesday.

With tensions escalating in the Middle East, Gold price is drawing support as a safe-haven asset. Additionally, lower US Treasury bond yields due to the flight to safety are also providing a boost to the XAU/USD. Despite the US Dollar remaining below a one-month high, it is doing little to drive momentum for Gold price.

It’s important to note that a less aggressive policy easing by the Federal Reserve (Fed) in 2024 could limit the upward potential for the non-yielding Gold price. As such, caution is advised for bullish traders, who should wait for strong buying momentum as confirmation that the precious metal has found stability near the $2,000 psychological mark.

Daily Digest Market Movers: Gold price remains supported by global  flight to safety amid geopolitical risks

• The risk of a further escalation of geopolitical tensions in the Middle East weighs on investors’ sentiment and lends support to the safe-haven Gold price on the first day of a new week.
• A drone attack on a US base in Jordan killed three US soldiers, marking the first death of US service personnel in the region since the Hamas-Israel war broke out on October 7.
• President Joe Biden doubled down on his pledge of reprisals and said that the US shall respond and hold all those responsible to account at a time and in a manner of our choosing.
• The US Dollar (USD) holds steady just below a one-month peak as investors continue to scale back their expectations for a more aggressive easing by the Federal Reserve.
• Data released on Friday, however, showed that inflation rose modestly in December and reaffirmed expectations that the Fed will start cutting interest rates by the middle of 2024.
• The US Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index held steady at 2.6% on a yearly basis in December.
• Meanwhile, the annual Core PCE Price Index – considered the Fed’s preferred gauge of inflation – decelerated more than expected, to 2.9% from 3.2% in November.
• Other details of the publication showed that Personal Spending rose 0.7% in December while Personal Income grew 0.3%,

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