Gold Price Forecast: XAU/USD looks to $4100 and US CPI inflation amid geopolitical risks
- Gold falls for the third straight day on Wednesday, as the recent recovery falters ahead of US inflation.
- US Dollar pauses correction amid rising Oil prices and stabilizing US Treasury bond yields.
- The daily bearish RSI remains a headwind for Gold buyers, with $4,100 seen at risk.
Gold is extending the recent downtrend into a third consecutive day on Wednesday, looking to challenge $4,100 ahead of the critical US Consumer Price Index (CPI) data release.
Gold eyes US CPI inflation for next move
Amid a pause in the US Dollar (USD) correction and stabilizing US Treasury bond yields, Gold faces renewed selling pressure as traders lock in profits after last week’s recovery.
USD buyers are fighting back control amid the revival of oil prices' uptrend after intensifying fighting between Saudi Arabia and Yemen’s Iran-backed militia, the Houthis.
Renewed hostilities in the Gulf and between Russia and Ukraine rekindled supply disruption concerns, sending Oil prices to two-week highs and stoking inflation fears yet again.
“Saudi Arabia has launched a series of strikes on a strategic oil depot on the outskirts of Yemen’s capital, Sana’a, while later on Tuesday it said it had intercepted missiles launched toward Dharan, the location of the headquarters of the huge national energy company Saudi Aramco,” per The Guardian.
Meanwhile, in the Russia-Ukraine conflict, more ballistic missiles were then launched by Moscow at Kyiv on Tuesday night, striking a key power plant in the capital despite a purported energy ceasefire claimed by US President Donald Trump.
Against this backdrop, Gold traders eagerly await the US CPI inflation report for fresh clues on the US Federal Reserve’s (Fed) next monetary policy decision, with markets pricing in only around a 20% chance of an October interest rate hike.
Recent mixed messages from Fed officials and soft US labor market data have tempered expectations for further Fed tightening. However, bets for a 25 basis points (bps) rate hike stand at about 70%, according to the CME Group’s FedWatch Tool.
Therefore, the US CPI data will be crucial to determining the next major move in Gold. Core CPI is expected to rise by 0.2% on a monthly basis in September, while annually, core inflation is seen picking up from 2.4% to 2.5%.
The inflation report is one of the last major economic releases before the Fed (monetary policy meeting due later this month.
A hotter-than-expected CPI reading could strengthen expectations for another Fed rate hike this year, pushing US Treasury yields higher and boosting the US Dollar. This could increase selling pressure on Gold.
Conversely, cooler inflation could reduce expectations for further monetary tightening, weigh on the US Dollar, and revive the recovery in Gold prices.
Gold price technical analysis: Daily chart
In the daily chart, XAU/USD trades at $4,159.74, extending a corrective phase below all the major moving averages and keeping the near-term bias bearish. Spot is capped beneath the 21-day simple moving average (SMA) at $4,216.32, with the 100-day SMA at $4,249.66 and the 50-day SMA at $4,337.43 reinforcing a dense overhead supply zone, while the 200-day SMA higher at $4,525.40 suggests the broader uptrend remains under pressure. The Relative Strength Index (14) at 42.93 stays below the mid-50s area, hinting at subdued bullish momentum rather than outright oversold conditions.
On the topside, immediate resistance emerges at the 21-day SMA near $4,216, followed by the 100-day SMA around $4,250 and then the 50-day SMA close to $4,337; only a sustained break above this cluster would ease the current bearish tone. On the downside, the main structural floor is the rising trend-line support around $4,001.95, where a decisive daily close below that level would open the door to a deeper pullback, while holding above it would keep the longer-term constructive structure intact despite the present correction.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Economic Indicator
Core Personal Consumption Expenditures - Price Index (MoM)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The MoM figure compares the prices of goods in the reference month to the previous month.The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Thu Oct 29, 2026 12:30
Frequency: Monthly
Consensus: -
Previous: 0.2%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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.
