Gold retreats further from one-week top as profit-taking kicks in ahead of US data

• Gold faces rejection near $4,500 as the underlying bullish sentiment prompts profit-taking.
• Rising geopolitical tensions and dovish Fed expectations could support the precious metal.
• Investors now look forward to important US macro releases for some meaningful impetus.

Gold (XAU/USD) extends its intraday retracement slide from the $4,500 psychological mark, or over a one-week high touched this Wednesday, and has now reversed a major part of the previous day’s positive move. As investors digest the recent US attack on Venezuela, the underlying bullish sentiment turns out to be a key factor that prompts some profit-taking around the precious metal. The downside for the commodity, however, seems cushioned amid rising geopolitical tensions and dovish US Federal Reserve (Fed) expectations.

In fact, US President Donald Trump threatened to annex Greenland following confrontational rhetoric toward Colombia and Mexico earlier this week. Furthermore, traders have been pricing in the possibility of two more interest rate cuts by the US central bank, which has failed to assist the US Dollar (USD) to build on the previous day’s move higher and could offer some support to the non-yielding Gold. Traders might also opt to wait for the release of important US macro releases, including the Nonfarm Payrolls (NFP) report on Friday.

Daily Digest Market Movers: Gold bulls opt to take some profits off the table ahead of US macro data

• Investors appeared to shrug off worries stemming from the US attack on Venezuela over the weekend, with the S&P 500 and the Dow Jones Industrial Average notching fresh record highs on Tuesday.
• Meanwhile, US President Donald Trump openly signaled that Colombia and Mexico could also face US military action as part of a widening campaign against criminal networks and regional instability.
• Moreover, the White House said on Tuesday that Trump is discussing options for acquiring Greenland, including potential use of the US military, in a revival of his ambition to control the strategic island.
• This comes on top of the lack of progress in the Russia-Ukraine peace deal, unrest in Iran, and issues surrounding Gaza, which keeps geopolitical risks in play and should support the safe-haven Gold.
• According to the CME Group’s FedWatch tool, traders are pricing in the possibility that the US Federal Reserve will lower borrowing costs in March and deliver another rate cut by the end of this year.
• Richmond Fed President Thomas Barkin said that further changes to the short-term rate will need to be tuned to incoming data amid the risks to both the central bank’s employment and inflation goals.
• Friday’s release of the closely-watched US Nonfarm Payrolls (NFP) report and the US consumer inflation figures, due next Tuesday, could offer more cues about the Fed’s further rate-cut path.
• This, in turn, will play a key role in influencing the USD price dynamics in the near-term and help in determining the next leg of a directional move for the non-yielding yellow metal.
• In the meantime, Wednesday’s US economic docket – featuring the ADP report on private-sector employment, ISM Services PMI, and JOLTS Job Openings – might provide some impetus.

Gold bears might aim to test 100-hour SMA support near $4,400 mark

The 100-hour Simple Moving Average (SMA) rises and sits beneath spot prices, suggesting underlying trend support near the $4,400 mark. The Moving Average Convergence Divergence (MACD) slips below the Signal line and holds in negative territory, with the histogram expanding on the downside. The Relative Strength Index (RSI) eased to 48.58, neutral, reflecting balanced momentum after recent softness.

In the near term, momentum would need to stabilize to reassert the bullish tone. A MACD turn toward a bullish crossover and an RSI push back above 50 would support an upswing, while failure to improve could keep the bias heavy and expose a retest of the 100-hour SMA. With price still above that rising baseline, dips could remain contained, but a close beneath it would open room for further downside.