Gold Price Forecast: 100DMA appears a tough nut to crack ahead of US Consumer Price Index

Gold price is jumping back on the bids above the $1,700 mark, as investors gear up for Thursday’s critical Consumer Price Index (CPI) data from the United States. A typical sense of calm prevails ahead of the American top-tier data, which is expected to have a significant market impact.

All eyes on the United States October Consumer Price Index 

Investors are refraining to place any fresh directional bets on Gold Price, as all eyes now remain on the US Consumer Price Index data due to be published later in the day. The monthly US CPI is seen rising to 0.6% while the annualized inflation rate is seen softening to 8.0%. The Core CPIs are likely to ease across the time horizon, suggesting signs of peak inflation.  The fate of the non-interest-bearing Gold price hinges on the data. The US Dollar could come under additional selling pressure on the softer Consumer Price Index, as it would mean that the US Federal Reserve (Fed) could opt for a smaller rate hike in December.

US Dollar repositions ahead of Consumer Price Index

The US Dollar is reversing its previous recovery in Thursday’s trading so far, as investors resort to repositioning ahead of the significant market-moving event, the Consumer Price Index. The inflation report from the United States is expected to affect the valuation of the American Dollar. The USD-sensitive Gold price is also likely to face some massive volatility on the data publication. The US Dollar staged a solid recovery from near two-month lows against its major rivals amid broad risk-aversion, which revived the greenback’s safe-haven appeal.

Crypto market sell-off knocks off risk sentiment

The FTX.com-chaos led massive sell-off across the cryptocurrencies rattled markets and killed investors’ appetite for risker assets. Therefore, the Wall Street indices tumbled over 2%, lifting the US Dollar across the board at the expense of the Gold price. A day after Binance founder Changpeng “CZ” Zhao said he would bail out Sam Bankman-Fried’s FTX.com, his cryptocurrency exchange backed out of the deal citing financial and regulatory issues, per Bloomberg. The U-turn left FTX and its clients facing an uncertain future while that coupled with Meta CEO Mark Zuckerberg announcing more than 11K job cuts weighed heavily on risk sentiment.

US Midterm Elections – No red wave

Democrats doing surprisingly in the United States Midterm Elections also boded ill for the market, as they had expected a clean Republican sweep. Republicans are almost certain to take control of the House of Representatives, although with far narrower margins than many predicted. On the other hand, Democrats are likely to retain their Senate majority. Investors flock to the safety in the US Dollar in times of market panic and unrest.

Rising US Treasury yields weigh on Gold price

The risk-off wave also triggered a rush to safety in the US government bond market, knocking down the Treasury yields across the curve. The persistent weakness in the US rates is also helping Gold price stage an uptick heading into the Consumer Price Index showdown. Bond markets also digest the comments from New York Federal Reserve President John Williams, who said on Wednesday that “relatively stable long-term inflation expectations are good news.” Meanwhile, Minneapolis Federal Reserve (Fed) President Neel Kashkari said this Thursday, “we will do everything we can to achieve a soft landing while getting inflation down - it's not entirely up to the Fed though.”

Gold price technical outlook: Daily chart

Technically, nothing seems to have changed for Gold price as the bearish 100-Daily Moving Average (DMA) at $1,715 continues to check buyers’ enthusiasm. Bulls, however, remain hopeful amid an extension of the descending triangle breakout on the daily chart.

The bullish 14-day Relative Strength Index (RSI) also suggests that Gold buyers could likely retain control going forward.

But daily closing above the 100DMA is critical to initiating a fresh upswing. The immediate resistance is seen at multi-week highs of $1,717, above which the October high at $1,730 will be put to test.

On the downside, the $1,700 mark could offer strong support, below which a sharp drop toward the 50DMA at $1,674 cannot be ruled out. Ahead of that, the previous week’s high at $1,683 could come to the rescue of bulls.