Gold retreats from record high as Powell cools cut bets, US Dollar strengthens

• Gold tumbles as Fed's Powell reiterates balanced dual mandate, notes labor risks and high inflation, dampening rate-cut hopes.
• US Treasury yields climb, boosting the US Dollar Index to 97.85 and pressuring bullion after three-day rally.
• Traders eye GDP, jobless claims, and Core PCE data for fresh direction on Fed easing outlook.

Gold (XAU/USD) price turns negatively on Wednesday after rallying for three consecutive trading days, which pushed the yellow metal to a record high at $3,791, before retreating somewhat as investors digest Federal Resever (Fed) Chair Jerome Powell's comments, which seem to pour cold water on rate cut expectations.

Gold slips as rising yields and Greenback demand weigh; focus shifts to GDP and PCE inflation

XAU/USD trades at $3,734, down 0.78% at the time of writing. Greenback's advance is one of the reasons that put a lid on Bullion prices, underpinned by Powell's neutral stance.

Fed Chair Powell said that policymakers must look at both sides of the dual mandate equally. He recognized that risks in the labor market had risen as well as for inflation, from which he said that it remains "somewhat elevated," and added that monetary policy is modestly restrictive, but "well positioned to respond to potential economic developments."

On the data front, housing data was positive on Wednesday after Tuesday's weaker-than-expected S&P Global Flash Purchasing Managers' Index (PMI) report.

The sudden drop in Bullion prices could also be attributed to the rise of US Treasury yields, which are underpinning the American currency. The US Dollar Index (DXY), which tracks the buck's value against a basket of six currencies, is up 0.66% at 97.85.

Regarding geopolitics, US President Donald Trump's sudden shift towards supporting Ukraine, as he said, "Kyiv can win all of Ukraine back from Russia."

The US economic docket will feature Gross Domestic Product (GDP) figures, Initial Jobless Claims data and the Fed's preferred inflation gauge, the Core Personal Consumption Expenditures (PCE) Price Index.

Daily digest market movers: US Treasury yields weigh on Gold prices

• US Treasury yields are climbing, with the 10-year Treasury note up three basis points (bps) at 4.137%. US real yields--calculated by subtracting inflation expectations from the nominal yield--, which correlate inversely to Gold prices, surge nearly three and a half bps to 1.767%.
• New Home Sales in August improved sharply, from 0.664 million to 0.8 million, a 20.5% increase that exceeded forecasts of 0.65 million. Although the data was positive, the latest S&P Global Purchasing Managers Index (PMI) print in the services and manufacturing sectors indicates that the economy is cooling.
• Traders are eyeing the release of Initial Jobless Claims for the week ending September 20, with estimates of 235K people filing for unemployment benefits, above the previous number of 231K.
• Durable Goods Orders in August are projected to improve, following July's dismal print of -2.8%. Economists estimate that orders will dip -0.5% MoM. At the same time, the final reading of the US GDP for the second quarter is expected to remain unchanged at 3.3% YoY.
• A flurry of Federal Reserve speakers will cross the wires, with regional Fed Presidents Schmid, Williams, Logan and Daly, leading the pack. Fed Governors Bowman and Barr will complete the parade.
• The Federal Reserve is expected to cut rates by 25 bps at the October 19 meeting, as revealed by data from Prime Market Terminal. Odds are at 91%.

Technical outlook: Gold price sinks below $3,750, bears eye $3,700

Gold price bullish bias remains intact in the long-term, but daily, a reversal is underway, threatening to keep prices below $3,750 towards the end of the day. If achieved, XAU/USD could remain range-bound within the $3,700-$3,750 range as market participants wait for fresh catalysts.

If XAU/USD drops below $3,700, the next support would be the 20-day Simple Moving Average (SMA) at $3,613, ahead of challenging $3,600. Otherwise, if buyers claim $3,750, the next area of interest would be the all-time high at $3,791.