Gold Price Forecast: XAU/USD consolidates near record highs

XAU/USD Current price: $2,470.00

• The United States will publish the July Consumer Price Index on Wednesday.
• Financial markets adopted a cautious stance ahead of first-tier figures from the US and the UK.
• XAU/USD consolidates near record highs, bulls hold the grip.

Gold price moved one step closer to its record high on Tuesday, hitting $2,476.81 during Asian trading hours. XAU/USD, however, spent most of the day stuck to its daily opening level at around $2,470 as market players turned cautious ahead of first-tier headlines. Following a relatively quiet week in terms of macroeconomic releases, the focus returns to inflation.

The United Kingdom (UK) and the United States (US) will publish fresh Consumer Price Index (CPI) figures on Wednesday. The numbers will affect the respective central banks’ decisions and, hence, affect both currencies in the near term. Clearly, US figures will have a larger impact on the bright metal, as the Federal Reserve (Fed) has yet to decide on an interest rate cut.

Financial markets have had erratic sentiments about what and when the Fed may act. The central bank, however, has just recently shifted into a more dovish stance, paving the way for a September rate cut. Just recently, tepid growth related data boosted speculation the Fed has no choice but to trim interest rates next month.

Indeed, inflation figures will have a saying, as softer-than-anticipated CPI numbers will further pave the way towards lower rates. Ahead of the event, the US published the July Producer Price Index (PPI), which rose 0.1% MoM in July as expected, while the annual increase resulted at 2.2%, below the 2.3% anticipated and the previous 2.7%. The core annual inflation at wholesale levels eased from 3% in June to 2.4%.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart for XAU/USD shows bulls retain control. The pair holds well above all its moving averages, with the 20 Simple Moving Average (SMA) partially losing its bullish strength but still providing dynamic support at around 2,420.00. At the same time, the Momentum indicator keeps grinding higher well above its midline, while the Relative Strength (RSI) indicator consolidates at around 61, skewing the risk to the upside.

XAU/USD is poised to retest its record high at $2,483.68. The pair trades well above all its moving averages, with a bullish 20 SMA accelerating north above the 100 and 200 SMA, which slowly gain upward traction. Finally, technical indicators maintain modest upward slopes well above their midlines, reflecting the ongoing consolidation yet maintaining the risk skewed to the upside.

Support levels: 2,458.30 2,442.90 2,438.80

Resistance levels: 2,483.70 2,495.10 2,510.00