Gold price falls to a new two-month low as investors expect the Fed to keep interest rates higher for longer.

The gold price (XAUUSD) has entered a negative consolidation phase below the crucial $2,000 level. Oscillating near a two-month low reached during the Asian session on Wednesday. Investors currently appear to believe that the Federal Reserve (Fed) will keep interest rates higher. For an extended period of time in the face of a healthy US economy and persistent inflation. The bets were reinforced by a stronger than expected US inflation report released on Tuesday. Which maintains supportive of high US Treasury bond yields while undermining the non yielding yellow metal.

A lower risk tone may bolster the safe haven XAUUSD and aid limit additional losses.

Bulls of the US Dollar (USD) are taking a breather after the robust post US CPI surge to the highest level since November 14. This, combined with a generally lower tone. Throughout the global equities markets. Aids the safe haven gold price in defending the 100-day Simple Moving Average (SMA) support. However, given the aforementioned fundamental backdrop. The precious metal’s path of least resistance continues to the downside. As a result, any attempted recovery may be viewed as a selling opportunity. With the risk of fizzling out rapidly.

Daily Market Movers: Gold stays down near two-month low amid delayed Fed rate cut bets.

The US inflation figures issued on Tuesday cooled expectations for an early interest rate cut by the Federal Reserve and continued to undercut the non-yielding gold price.
According to the Bureau of Labor Statistics. The headline US CPI increased by 0.3% in January, slowing to 3.1% YoY from 3.4% in December, exceeding forecasts.
Furthermore, the Core CPI, which excludes volatile food and energy prices. Outperformed expectations and matched December’s 3.9% increase.
Against the backdrop of recent improved US macro data, the Fed sees little justification to decrease interest rates.
The CME Group’s FedWatch Tool shows a little more than a 35% possibility of a rate drop in April, and the Fed will Interest rates will most likely not be reduced until the June policy meeting.
The expectations push the yield on the benchmark 10-year US government bond to its highest level since December 1, acting as a tailwind for the US dollar.
Renewed concerns about increasing longer-term interest rates dampen investors’ demand for riskier assets, allowing the XAUUSD to defend the 100-day SMA support.

Technical analysis:

The gold price consolidates around the 100-day SMA support before the next move down.
From a technical standpoint, some follow-through selling below the $1,990-1,988 zone (100-day SMA). Might expose the critical 200-day SMA support. Which is currently anchored near $1,965. A decisive breach below the latter will be viewed as a new trigger for pessimistic traders. Paving the way for aFurther near-term depreciation. The gold price may then fall to an intermediate support level of $1,952-1,950. Before plunging to the November 2023 low of about $1,932-1,931.
On the other hand, any attempt to recover over $2,000 presently appears to face heavy opposition in the $2,011-2,012 range. However, sufficient follow-through purchasing. Resulting in additional strength over the $2,015 mark. Might cause a short-covering rally, lifting the gold price to the 50-day SMA, which is now around $2,030. The latter should operate as a significant pivotal point, which if strongly cleared should pave the way for further rises beyond the $2,044-2,045 intermediate obstacle, towards the $2,065 supply zone.