Gold Price Forecast: Risks appear skewed to the downside for XAU/USD, US inflation in focus

Gold price remains pressured amid firmer US dollar amid cautious optimism.
ECB decision, US CPI to highlight policymaker’s thinking about monetary stimulus.
Gold’s four-hour chart paints a bearish picture heading into the key event risks.

Dhwani Mehta FXStreet

Gold price (XAU/USD) fell for the second straight day on Wednesday, as a global sell-off ensued on increased nervousness ahead of Thursday’s European Central Bank (ECB) monetary policy decision and US Consumer Price Index (CPI) data. The risk-off market mood dragged the Treasury yields lower, although helped lift the US dollar across the board at gold’s expense. Escalating US-China tensions over an alleged Beijing’s tech threat and uncertainty over President Joe Biden’s infrastructure stimulus plans also weighed on the investor’s sentiment. However, the dollar’s strength remained the key catalyst behind the decline in gold price.

Gold price is extending the previous decline, undermined by the dollar’s demand. The greenback holds the higher ground, despite the market optimism, as investors resort to repositioning ahead of the all-important ECB announcement and US inflation release. These key events will shed light on the pace of global recovery and policymakers’ thinking about paring back stimulus. If the US CPI print comes in hotter than the consensus of a 0.4% rise in May, it will ramp up the Fed’s tapering expectation, which will render negative for the non-yielding gold. The ECB could also hint towards dialling back of the emergency bond-buying programme.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

Gold’s four-hour chart paints a bearish picture, as the price has confirmed a symmetrical triangle breakdown in the US last session.

The Relative Strength Index (RSI) points south below the midline, allowing room for more declines.

Therefore, sellers could target the immediate support at the horizontal (orange) trendline connecting previous lows at $1881.

A breach of the latter could trigger a drop towards the June 4 low of $1856. Ahead of that, a demand area around $1865 could offer some reprieve to the bulls.

Meanwhile, any recovery attempt could face stiff resistance around the $1891-$1895 region, where the 21, 50 and 100-simple moving averages (SMA) collide.

Further up, the triangle resistance at $1900 will challenge the bullish commitments. The previous month high at $1913 is the level to beat for the optimists.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.