Gold price falls back as the “early rate-cuts” narrative wanes.

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• Gold price falls back as the “early rate-cuts” narrative wanes.
• The Fed needs more evidence to be confident that inflation will return to 2%.
• The US Dollar advances ahead of ISM Manufacturing PMI, NFP data.

Gold price (XAU/USD) faces an intense sell-off in Thursday’s early New York session. The upside in the Gold price remained restricted as the Federal Reserve (Fed) has pushed back expectations of a rate cut in March. Fed Chair Jerome Powell showed disinterest in rate-cut speculation, arguing that policymakers are still unconvinced that underlying inflation will sustainably return to the 2% target. As Jerome Powell has spooked expectations of rate cuts in March, investors have turned to May’s policy meeting for the first rate cut of this cycle.

As we advance, the inflation outlook will be guided by labor market conditions, consumer spending, and economic growth, which will set a fresh undertone for rate-cut expectations.

Meanwhile, investors await January’s Institute for Supply Management’s (ISM) Manufacturing PMI and the Nonfarm Payrolls (NFP) data. The expectations of a rate cut at May’s Fed monetary policy meeting could wane if the employment and wage growth data turn out higher than expected.

Gold price falls vertically ahead of the US ISM Manufacturing PMI and the Employment data. From a technical perspective, the broader outlook for the precious metal is upbeat as it has delivered a breakout of the Symmetrical Triangle chart pattern formed on a daily timeframe. The 20-day Exponential Moving Average (EMA) at $2,032.50 is acting as a cushion for the Gold price.

The 14-period Relative Strength Index (RSI) is approaching the 60.00 hurdle. If the RSI manages to sustain above the hurdle, bullish momentum could be triggered.

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