Gold price drifts lower amid a broadly stronger USD; remains close to weekly through

• Gold price attracts sellers for the third straight day amid some follow-through USD strength.
• Trade optimism and the upbeat market mood further undermine the precious metal.
• The Fed uncertainty could cap the USD and help limit losses for the non-yielding commodity.

Gold price (XAU/USD) struggles to capitalize on the overnight bounce from the vicinity of mid-$3,300s and trades with a mild negative bias during the Asian session on Friday. The US Dollar (USD) attracts some follow-through buyers and moves further away from a multi-week low touched on Thursday, which, in turn, is seen as a key factor weighing on the commodity. Adding to this, the latest trade optimism fueled by the US-Japan deal undermines demand for the safe-haven precious metal and contributes to the weaker tone for the third straight day.

However, the uncertainty over the Federal Reserve's (Fed) rate-cut path and fears about the central bank's independence, amid mounting political pressure to lower borrowing costs, might hold back the USD bulls from placing aggressive bets. Moreover, a dangerous escalation of border disputes between Thailand and Cambodia could offer some support to the Gold price. Traders now look forward to the release of US Durable Goods Orders, which might influence the USD and provide some impetus to the XAU/USD pair heading into the weekend.

Daily Digest Market Movers: Gold price is pressured by a stronger USD and receding safe-haven demand

• Data released on Thursday pointed to a still resilient US labor market and reinforced the view that the Federal Reserve will hold interest rates at the upcoming monetary policy meeting next week. The US Department of Labour reported that the number of US citizens submitting new applications for unemployment insurance fell for the sixth straight week, to 217K during the week ended July 19. This marked the lowest reading since mid-April.
• Furthermore, the S&P Global's US Composite PMI climbed to 54.6 in July from 52.9 in the previous month, marking the 30th straight month of expansion. The growth was concentrated in the services sector, which offsets weakness in the manufacturing sector. The Services PMI rose from 52.9 to 55.2, marking the strongest expansion since the start of the year, while the gauge for the manufacturing sector contracted for the first time since December 24.
• Further details of the report revealed that employment strength across both the manufacturing and services sectors continues to support near-term stability. Adding to this, intensifying price pressures suggest that inflation could accelerate in the second half of the year, mainly because of tariffs on imports. This might further force the Fed to maintain the status quo on rates despite US President Donald Trump's repeated calls to lower borrowing costs.
• Trump dialed up the pressure on Fed Chair Jerome Powell during a rare presidential visit to the central bank's headquarters. Moreover, Fed Governor Chris Waller and Trump appointee Vice Chair for Supervision Michelle Bowman have advocated a rate reduction as soon as the next policy decision on July 30. This could act as a headwind for the USD and offer support to the non-yielding Gold price amid the rising Thailand-Cambodia border dispute.

Gold price might continue to find support near 100-SMA on H4, around mid-$3,300s

The overnight bounce from the vicinity of the 100-period Simple Moving Average (SMA) on the 4-hour chart runs out of steam near the $3,377 region. The said area should now act as an immediate strong barrier, above which a bout of short-covering could allow the Gold price to reclaim the $3,400 mark. Some follow-through buying should pave the way for a move towards the $3,438-3,440 static barrier, which coincides with the top boundary of an ascending channel held since the beginning of this month.

On the flip side, Thursday's swing low, around the $3,351 area, which nears the 100-period SMA on the 4-hour chart, might continue to protect the immediate downside for the Gold price. This is followed by the trend-channel support around the $3,335 region. A convincing break below the latter might shift the near-term bias in favor of the XAU/USD bears and expose last week's swing low, around the $3,309 area. The commodity could weaken further below the $3,300 mark and retest the monthly trough, around the $3,283-3,282 zone.