Gold Price Forecast: XAU/USD extends consolidative phase above $2,500

XAU/USD Current price: $2,513.31

• Market players keep waiting for inflation updates and potential effects on central banks’ decisions.
• US CB Consumer Confidence improved by more than anticipated in August.
• XAU/USD is neutral-to-bullish in the near term, bulls taking their chances of dips.

Quiet trading extends on Tuesday, with Gold changing hands at around $2,510 a troy ounce. The bright metal is confined to a tight intraday range as expectations mount for the upcoming United States (US) inflation figures to be out on Friday. The country is set to release the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge. Price pressures in the US remain above the Fed’s 2% goal but far from the four-decade high hit in mid-2022.

But it is not just about receding inflation. The labor market has finally shown signs of loosening, meaning wages-related risks have decreased. In the meantime, the economy keeps growing at a relatively healthy pace, all of which backs an interest rate cut. Chairman Jerome Powell and co have spent the last month hinting towards a shift in the current monetary policy, reinforcing the idea of a new cycle coming when he spoke at the Jackson Hole Symposium last week.  Hopes the Fed will trim rates in September maintain the US Dollar under pressure.

Meanwhile, United States (US) data beat expectations.  The Conference Board's (CB) Consumer Confidence Index rose to 103.3 in August, while the July figure was upwardly revised to 101.9 from 100.3. Furthermore, the Expectations sub-index improved to 82.5, while the July reading was revised to 81.1, marking the second consecutive month of the Index above 80.  A reading below the latter usually signals a recession ahead.

XAU/USD short-term technical outlook  

From a technical point of view, the risk for XAU/USD remains scheduled to the upside. The daily chart for the pair shows it keeps developing above all its moving averages, with the 20 Simple Moving Average (SMA) maintaining its upward slope well above also bullish 100 and 200 SMAs. Technical indicators, in the meantime, have lost their upward strength but consolidate near overbought readings, falling short of suggesting an upcoming decline.

In the near term, and according to the 4-hour chart, XAU/USD is neutral-to-bullish. A flat 20 SMA keeps providing intraday support, while the 100 and 200 SMAs grind north far below the current level. Technical indicators, however, stand right above their midlines without clear directional strength. The risk of a steeper decline seems limited, but the lack of progress could force some profit-taking and send Gold below the $2,500 mark.

Support levels: 2,508.80 2,496.40 2,485.10  

Resistance levels: 2,523.50 2,531.60 2,542.00