Gold Price Forecast: Bull-bear tug-of-war around $1,850 extends, all eyes on US inflation

Gold Price tested the bullish commitments below the critical daily support of $1,842 on Tuesday and managed to regain ground above the latter. This allowed bulls to snap a two-day corrective downside and close the day in the green above the $1,850 level. Risk-off flows dominated throughout the day, as global growth fears resurfaced on the aggressive tightening path adopted by major central banks. This boosted the safe-haven demand for the US dollar and government bonds, dragging the Treasury yields sharply lower from the highest level since May 11. The retreat in the yields, helped the metal to stage a decent comeback, although the further upside remained capped by the persistent dollar strength and a late turnaround in Wall Street indices.

With no major US economic data release due on the cards, gold price is seen extending its defensive trading around $1,850. The dollar is finding fresh demand amid a renewed uptick in the Treasury yields across the curve. Meanwhile, investors remain nervous amid looming concerns over stagflation, especially after the World Bank on Tuesday lowered the 2022 global growth forecast to 2.9% from 4.1% seen in January.

Looking ahead, the dollar could likely remain buoyant by the cautious market mood while also finding support from firmer yields. This could keep gold sellers hopeful in the near term. All eyes now turn towards the US inflation data release due on Friday for the next big move in gold price. The critical CPI figures will provide fresh hints on the Fed’s tightening path, impacting the USD valuations, as well as, the metal price.

Gold Price Chart: Daily chart

As observed on the daily chart, gold price is trading choppy within a familiar trading range, challenging the critical $1,842 demand area.

That level is the confluence of the horizontal 21 and 200-Daily Moving Averages (DMA).

Daily closing below the latter is needed to extend the correction from monthly highs of $1,874 reached last Friday.

Selling resurgence could see bears attacking Tuesday’s low of $1,837, below which a test of the previous week’s low of $1,829 remains on the cards. The last line of defense for buyers is seen at the $1,820 round level.

The 14-day Relative Strength Index (RSI) is inching slightly lower below the 50.00 threshold, keeping the downside favored.

On the flip side, any recovery will need acceptance above the $1,850 psychological barrier, above Monday’s high of $1,858 could be on the buyers’ radars.

The previous week’s high of $1,870 will be a tough nut to crack on the road to recovery.