Gold price trades in a tight range below $2,000 as investors now see the Fed reducing key rate in June.

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• Gold price trades in a tight range below $2,000 as investors now see the Fed reducing key rate in June.
• The US Dollar remains subdued as the focus shifts to US Retail Sales data.
• Investors anticipate that Retail Sales contracted by 0.1% in January.

Gold price (XAU/USD) consolidates in a tight range ahead of the monthly United Sales Retail Sales data for January. The consensus shows a moderate decline in sales as households spent heavily in December amid the festive season, decline in gasoline prices, and lower auto sales.

The impact of lower Retail Sales data is expected to remain limited on the US Dollar as cooling expectations of aggressive rate cuts by the Federal Reserve (Fed) will continue to act as a cushion in the broader term. The US Dollar tends to attract high foreign inflows on expectations that the Fed will maintain a hawkish narrative for a longer period.

While investors are not expecting a rate-cut move by the Fed before June following stubborn inflation data, US Treasury Secretary Janet Yellen and Chicago Federal Reserve Bank President Austan Goolsbee see the one-time bump as incapable of impacting the longer-term trend in inflation declining towards the 2% target. Austan Goolsbee warned that higher interest rates for a longer period could result in a significant blow to employment, which is one of the Fed’s dual mandates.

Gold price trades in a tight range, slightly above the immediate support of $1,990. The broader outlook for the precious metal has turned negative after breaking below the psychological support of $2,000. Also, the 20 and 50-day Exponential Moving Averages (EMAs) are on the verge of delivering a bearish crossover. The 200-day EMA near $1,970 is expected to become a major support for the Gold price bulls.

The 14-period Relative Strength Index (RSI) has established below 40.00, indicating more downside amid an absence of divergence and oversold signals.

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