Gold Price Forecast: XAU/USD confirms bearish wedge ahead of United States inflation data

Gold price is attempting a minor comeback while within a familiar range below the $1,800 mark on Tuesday as investors look to take profits on the latest US Dollar (USD) upsurge ahead of the all-important United States Consumer Price Index (CPI) data.

US Consumer Price Index could impact Federal Reserve’s outcome

The United States Dollar is reversing the previous turnaround so far in this Tuesday’s trading as markets reposition themselves, gearing up for the most important event of this week – the US Consumer Price Index slated for release at 13:30 GMT. Economists expect the headline Consumer Price Index to soften to 7.3% YoY and 0.3% MoM in November. Meanwhile, the Core figures are seen easing to 6.1% and 0.3% on an annualized and monthly basis. Any upside surprise in the Core CPI data could prompt the Federal Reserve policymakers to revise higher their forecasts for the terminal rate, eventually impacting the US central bank’s Dot Plot chart, which will be announced on Wednesday. The US Federal Reserve is widely expected to hike the key rates by 50 basis points (bps), slowing down its rate hike track amid growing recession fears.

Should the US Core Consumer Price Index beat estimates, it could trigger a US Dollar rally alongside the US Treasury bond yields, weighing negatively on the non-interest-bearing Gold price. The critical United States data is likely to impact the Gold price action significantly.

“It’s worth noting that even if the US Dollar comes under renewed selling pressure on a weak CPI print, the Euro and Pound Sterling could struggle to capture the capital outflows amid uncertainties surrounding the European Central Bank (ECB) and the Bank of England’s (BoE) policy decisions, which will be announced on Thursday. In that scenario, the Gold price could be the main beneficiary due to its inverse correlation with the benchmark 10-year US Treasury bond yield,” FXStreet’s Senior Analyst Eren Sengezer explained.

Goldman Sachs’ upbeat outlook helps Gold price rebound

Gold price also finds some fresh buying impetus from the latest research note published by Goldman Sachs, which offered an upbeat outlook going forward. The United States banking giant said that “gold, with its real demand drivers, to outperform the highly volatile bitcoin in the long term.”

Among other news concerning Gold price, Reuters reported that “seizures of smuggled gold in India reached a three-year high this year after the government raised the import duty on the precious metal and international flights resumed following COVID-19 curbs.” The seizure could pressure the global Gold supplies, boding well for Gold bulls.

Gold price technical analysis: Daily chart

Gold price yielded a rising wedge breakdown after closing Monday below the rising trendline support at $1,782.

The downside break opens floors to test the mildly bullish 21-Daily Moving Average (DMA) at $1,768.

Further south, the $1,750 psychological level could be on Gold sellers’ radars. Softer-than-expected US Consumer Price Index data is critical to extending the bearish breakdown.

The 14-day Relative Strength Index (RSI) is trading listlessly, still comfortably above the midline, suggesting that Gold price remains a ‘buy the dips’ trade.

On the upside, the immediate resistance is seen at the 200DMA at $1,790, above which the $1,800 mark will be a tough nut to crack for Gold bulls.

Upbeat US inflation data could offer Gold price acceptance above the latter, calling for a test of the multi-month high at $1,810.