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• Gold price retreats from a nine-month high as bulls opt to take some profits off the table.
• Bets for smaller rate hikes by Federal Reserve weigh on US Dollar and should limit losses.
• Looming recession risk might further lend some support to the safe-haven precious metal.

Gold price edges lower on Wednesday and moves away from a nine-month high, around the $1,942-$1,943 area touched the previous day. The XAU/USD remains on the defensive through the first half of the European session and is currently placed near the daily low, just below the $1,925 level, down nearly 0.70% for the day.
 

Bets for smaller rate hikes by Federal Reserve to benefit Gold price

The intraday downtick witnessed around the Gold price lacks any obvious fundamental catalyst and could be attributed to some profit-taking. That said, firming expectations for a less aggressive policy tightening by the Federal Reserve (Fed) could offer some support to the non-yielding yellow metal. In fact, the markets seem convinced that the Fed will soften its hawkish stance amid signs of easing inflationary pressures in the United States (US).
 

The softer US Dollar might further lend support to the Gold price

The CME's FedWatch Tool points to over a 90% probability for a smaller 0.25 bps rate hike at the next Federal Open Market Committee (FOMC) meeting that concludes on February 1. This will mark a further moderation in the pace of the rate-hike cycle, which keeps the US Dollar on the defensive near a nine-month low. A softer Greenback might turn out to be another factor that should help limit losses for the US Dollar-denominated Gold price.
 

Recession fears also favor XAU/USD bulls

Apart from this, the prevalent cautious mood could further act as a tailwind for the safe-haven Gold price. The recent optimism over the easing of strict COVID-19 restrictions in China remains capped amid looming recession risks. According to the latest report by World Bank, the global economy is now in its steepest slowdown following a post-recession recovery since 1970. This, in turn, takes its toll on the risk sentiment.
 

Focus on key macro data from the United States

The aforementioned fundamental backdrop supports prospects for the emergence of some dip-buying around the Gold price. Bulls, however, seem reluctant and prefer to move to the sidelines ahead of this week's important US macro releases, including the Advance Q4 GDP print. This, along with the US Personal Consumption Expenditures (PCE) Price Index, will influence the Fed's interest rate strategy and provide a fresh directional impetus to the XAU/USD.

In the meantime, the USD price dynamics, the US bond yields, and the broader risk sentiment will be looked upon for short-term opportunities in the absence of any relevant economic data from the US. Nevertheless, it will still be prudent to wait for strong follow-through selling before confirming that the Gold price has topped out in the near term and positioning for a deeper corrective pullback.
 

Gold price technical outlook

From a technical perspective, the $1,920 resistance breakpoint is likely to act as immediate support for the Gold price and protect the immediate downside. Any further decline might attract some buyers around the $1,911-$1,910 area, which should help limit losses near the $1,900 round figure. The latter should act as a pivotal point. A convincing break below might shift the near-term bias in favor of bearish traders and pave the way for some meaningful downside.

On the flip side, the $1,942-$1,943 region might continue to act as an immediate barrier for Gold price ahead of the $1,969-$1,970 zone. This is followed by the $1,980 barrier, above which bulls could aim to reclaim the $2,000 psychological mark for the first time since March 2022.
 

Key levels to watch

XAU/USD

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