Gold Price Forecast: XAU/USD defines a range but upside remains favored

Gold price re-attempts bids amid softer US Dollar after facing rejection at $2,050 on Wednesday.
Softer United States annualized Consumer Price Index confirmed a Federal Reserve pause in June.
Gold price looks to extend range trade between 21-Day Moving Average and $2,050.

Dhwani Mehta FXStreet

Gold price is looking to regain the upside traction above $2,030 so far this Thursday, following a negative close on Wednesday. But a broad-based United States Dollar (USD) rebound is capping the uptick in the Gold price yet again.

United States Consumer Price Index Downs the US Dollar

Wednesday’s headline US Consumer Price Index (CPI) data came in softer-than-expected and reinforced confidence in the market that a US Federal Reserve (Fed) rate hike pause in June is a done deal. The US Dollar tumbled with the US Treasury bond yields in an immediate reaction to soft US CPI inflation data, allowing Gold price to break higher and test the $2,050 mark. The US Consumer Price Index rose 4.9% in April YoY but was lower than expectations of a 5.0% increase. Month-over-month CPI in April rose 0.4% after gaining 0.1% in March.

However, the monthly US Core CPI increased 0.4% in April, at the same pace as in March. Even the annualized Core CPI rose 5.5% in April. The core figures remain quite sticky, fading hopes of any Federal Reserve rate cuts this year. This helped the US Dollar stage a comeback while investors looked for safety in the Greenback amidst looming banking sector risks and US default fears. Gold price, therefore, turned south to settle the day in the red near $2,030.

Markets stay cautious amid softer China inflation data

Following the United States CPI inflation data release, all eyes were on Chinese CPI and Producer Price Index (PPI) prints for fresh market impact and Gold price action. China’s Consumer Price Index rose 0.1% in April YoY, the slowest since early 2021. Month-on-month, prices declined by 0.1%. China’s Producer Price Index, which measures prices paid by wholesalers, fell 3.6%.

Hopes built up around China reopening and its positive economic impact seem to wane, sapping investors’ confidence early Thursday. As a result, the US Dollar is finding fresh demand, limiting the bullish attempts by Gold buyers.

Attention now turns toward the United States PPI data due later in American trading on Thursday for fresh trading impetus. Speeches from Federal Reserve policymakers will also be closely scrutinized for the Fed policy expectations.

Gold price technical analysis: Daily chart

Nothing seems to have changed technically for Gold price, as the bullish potential remains intact in the face of a falling wedge breakout confirmed last week. The 14-day Relative Strength Index (RSI) keeps its range above the midline, suggesting that bulls will likely retain control.

Gold buyers will gear up to challenge the $2,050 level once again if the renewed upside gathers momentum. Acceptance above the latter will open doors toward the record highs of $2,080.

On the flip side, Gold sellers could fight back control on a sustained move below this week’s low of $2,014, below which the mildly bullish 21-Daily Moving Average (DMA) at $2,010 will be put to the test.

Further south, the $2,000 psychological level will remain a tough nut to crack for Gold bears.

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 shows resilience below 38.2% Fibo. near mid-0.7100s

The AUD/USD pair touches a one-and-a-half-week low, around the 0.7140 region during the Asian session on Monday, though it lacks follow-through. Spot prices currently trade just above mid-0.7100s, down nearly 0.25% for the day.

USD/JPY: Japanese Yen edges lower vs USD amid Middle East jitters as Fed, BoJ meetings loom

The USD/JPY pair attracts some buyers at the start of a new week and climbs closer to the 154.00 mark during the Asian session, reversing a part of Friday's losses. Spot prices, however, remain confined in a range held over the past week or so and within striking distance of a nearly seven-month low, touched last Tuesday, as traders await this week's key central bank events.

Gold: Fed’s rate decision to drive the next move

Gold reflects a subdued performance at the start of the Federal Reserve’s monetary policy week at around $4,330. Fed’s interest rate expectations heavily influenced last week after the release of the hot United States Producer Price Index and Consumer Price Index reports for August.

Bitcoin consolidates, Ethereum faces hurdle, XRP nears key support

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) start the week near crucial technical levels after a broadly bearish performance, correcting over 4%, 1.5% and 5% last week. BTC consolidates around $77,600, while ETH approaches key $2,550 resistance. Meanwhile, XRP trades near its key level around $1.354, making this support level crucial for its near-term outlook.

US Dollar Weekly Forecast: The last line of defense

There was no respite to the downward trend for the US Dollar this week, which added to the prior week’s retracement and at some point flirted with the area of four-month lows. Indeed, after trading at levels just shy of its psychological 100.00 barrier early in the month, the US Dollar Index has come all the way down to challenge the 98.50 zone, extending its negative streak for the third month in a row.

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.