Gold price struggles to capitalize on the previous day’s recovery move from over a one-month trough.

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• Gold price struggles to capitalize on the previous day’s recovery move from over a one-month trough.
• Reduced bets for a March Fed rate cut put upward pressure on the US bond yields and caps gains.
• Escalating geopolitical tensions underpin the safe-haven XAU/USD and should limit the downside.

Gold price (XAU/USD) oscillates in a narrow trading range during the Asian session on Friday and remains well within the striking distance of over a one-month trough, around the $2,000 psychological mark touched earlier this week. Geopolitical tensions in the Middle East escalated further after Pakistan launched retaliatory airstrikes inside Iran on Thursday. This comes on top of US-Houthi clashes in the Red Sea, which, along with persistent worries about sustained economic weakness in China, acts as a tailwind for the safe-haven precious metal.

Meanwhile, the US Dollar (USD) extends its sideways consolidative price move for the third successive day and turns out to be another factor lending support to the Gold price. That said, reduced bets for an early interest rate cut by the Federal Reserve (Fed) remain supportive of elevated US Treasury bond yields, which might continue to lend support to the USD and cap gains for the non-yielding yellow metal. This, in turn, warrants some caution for aggressive bullish traders and before positioning for any meaningful appreciating move for the XAU/USD.

From a technical perspective, the lack of follow-through buying beyond the 50-day Simple Moving Average (SMA) suggests that the selling bias is still far from being over. Furthermore, oscillators on the daily chart have just started gaining negative traction and suggest that the path of least resistance for the Gold price is to the downside. Hence, any further move up might still be seen as an opportunity for bearish traders and runs the risk of fizzling out rather quickly near the $2,040-2,042 static resistance. Some follow-through buying, however, might trigger a short-covering rally and lift the XAU/USD towards the $2,077 area en route to the $2,100 psychological mark.

On the flip side, bearish traders might now wait for a sustained break below the $2,000 round figure before placing fresh bets. The Gold price might then accelerate the downfall towards the December monthly swing low, around the $1,974-1,973 region. The latter near the 100- and 200-day SMAs confluence, around the $1,971-1,963 area, which if broken decisively should pave the way for deeper losses towards the $1,955 intermediate support. The XAU/USD could eventually drop to the November swing low, around the $1,932-1,931 region.

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