Gold Forecast: A big miss on US CPI to drive XAU/USD above 200-DMA? [Video]


Having failed to sustain above $1840 once again Gold price fell as low as $1818 on Tuesday before recovering losses to end the day marginally higher around $1837. The two-way price action kept investors on their toes. Gold prices dropped sharply after the US dollar rebounded from multi-month lows on the renewed risk-aversion wave, triggered by rising inflation concerns. Investors remain concerned about overheating of the US economy, as the Treasury yields recaptured the 1.60% level. Rising inflation expectations brought the Fed’s taper calls back on the table, which spooked the markets and triggered a sell-off on Wall Street. The US stocks slide, however, helped gold recover some shine.

Heading into the US CPI showdown this Wednesday, gold returns to the red zone, as the US dollar’s safe-haven demand remains in vogue amid an escalation of tensions between Israel and Gaza. Further, markets remain unnerved ahead of the US CPI April month report amid concerns of a potential acceleration in price pressures and its implication on the economy.

The US CPI is seen arriving at 0.2% MoM in April vs. March’s 0.6% while the core figure is seen steady at 0.3%. On an annualized basis, the CPI is likely to accelerate to 3.6% in the reported month vs. 2.6% previous. The 12-month core rate is seen higher at 2.3% vs. 1.6% last. A CPI disappointment could tame inflation fears and squash Fed’s tapering and tightening expectations, which is likely to trigger a renewed burst of demand for the gold price.

Gold Price forecast Chart - Technical outlook

Gold forecast: Daily chart

Gold’s daily chart offers a constructive forecast, suggesting that a test of the 200-daily moving average (DMA) at $1849 remains on the cards.

The 14-day Relative Strength Index (RSI) is flatlined just beneath the overbought region, currently hovering around 67.50.

Meanwhile, an impending bull cross on the given time frame keeps the upbeat momentum intact around the gold price forecast.

The 21-DMA is on the verge of cutting the 100-DMA from below, which would represent a bullish crossover.

A daily closing above the 200-DMA could revive the bullish bets towards the $1900 mark.

Alternatively, gold prices could challenge Tuesday’s low of $1818, below which the May 7 low of $1813 will be on the sellers’ radars.

The 100-DMA at $1796 could act as a strong support if the correction from multi-month highs of $1846 regains traction.

 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis


Latest Forex Analysis

Editors’ Picks

EUR/USD: Teases 21-DMA support inside falling channel

EUR/USD edges lower around short-term support after five-day losing streak. EUR/USD holds lower ground near 1.1835, around the seven-day bottom, amid Friday’s initial Asian session.

EUR/USD News

GBP/USD consolidates above 1.3920 ahead of US NFP data

GBP/USD edges lower on Friday’s Asian trading session. The pair made a high near 1.3950 in the previous session but failed to holds the gains. US Dollar Index stays firm above 92.30 on upbeat economic data. The sterling remains unaffected post- BOE meeting.

GBP/USD News

Gold on the brink of a significant breakout around NFP

Gold is now in the balance of the NFP numbers on Friday. The market is taking into consideration a more hawkish tilt at the Fed. Technically, the price is at a critical juncture and a breakout could be imminent one way or the other.

Gold News

ICON looks extremely bullish in the long-term as ICX price targets $3

A brief technical and on-chain analysis on ICON price. Here, FXStreet's analysts evaluate where ICX could be heading next as it looks ready to continue surging.

Read more

US July NFP: Analyzing major pairs' reaction to NFP surprises

NFPs in US is expected to rise by 870,000 in July. There is a strong correlation between surprising NFP prints and major pairs' immediate movements. Investors are likely to react to a disappointing NFP more strongly than a positive reading.    

Read more

Majors

Cryptocurrencies

Signatures