Gold price hits a fresh two-month low amid bets that the Fed will keep rates higher for longer.

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• Gold price hits a fresh two-month low amid bets that the Fed will keep rates higher for longer.
• The expectations were reaffirmed by the stronger-than-expected US CPI released on Tuesday.
• A softer risk tone could lend support to the safe-haven XAU/USD and help limit further losses.

Gold price (XAU/USD) enters a bearish consolidation phase below the $2,000 psychological mark and oscillates near a two-month low touched during the Asian session on Wednesday. Investors now seem convinced that the Federal Reserve (Fed) will keep interest rates higher for longer in the wake of a still resilient US economy and sticky inflation. The bets were reaffirmed by a stronger-than-expected US inflation report released on Tuesday, which remains supportive of elevated US Treasury bond yields and continues to undermine the non-yielding yellow metal.

The US Dollar (USD) bulls, meanwhile, take a breather following the post-US CPI strong move up to the highest level since November 14. This, along with a generally weaker tone across the global equity markets, helps the safe-haven Gold price to defend the 100-day Simple Moving Average (SMA) support. That said, the aforementioned fundamental backdrop suggests that the path of least resistance for the precious metal remains to the downside. Hence, any attempted recovery might be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

From a technical perspective, some follow-through selling below the $1,990-1,988 region (100-day SMA) might expose the very important 200-day SMA support, currently pegged near the $1,965 area. A convincing break below the latter will be seen as a fresh trigger for bearish traders and pave the way for a further near-term depreciating move. The Gold price might then fall to an intermediate support near the $1,952-1,950 zone before eventually dropping to the November 2023 low, around the $1,932-1,931 region.

On the flip side, any attempted recovery beyond the $2,000 mark now seems to confront stiff resistance near the $2,011-2,012 area. That said, some follow-through buying, leading to a subsequent strength beyond the $2,015 level, might trigger a short-covering rally and lift the Gold price to the 50-day SMA, currently around the $2,030 region. The latter should act as a key pivotal point, which if cleared decisively should pave the way for additional gains beyond the $2,044-2,045 intermediate hurdle, towards the $2,065 supply zone.

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