Gold Price Forecast: XAU/USD reconquered $2,510, aims to retest record highs

XAU/USD Current price: $2,515.75

• The United States Consumer Price Index was roughly in line with expectations in August.
• Financial markets turned risk-averse as Fed expected to trim interest rates by 25 bps.
• XAU/USD met buyers around $2,500, aims to retest record highs in the $2,530 price zone.

Gold price peaked at $2,528.95, flirting with its record high mid-European session. XAU/USD, however, changed course and fell towards the $2,500 level after the release of United States (US) macroeconomic data. The August Consumer Price Index (CPI) rose by 2.5% YoY in August, easing from the 2.9% posted in July and below the 2.6% anticipated by market participants. The annual core reading matched expectations by printing at 3.2%, although the monthly core reading rose by 0.3%, slightly higher than the previous and expected 0.2%.

The news heavily weighed on rate cut expectations, with the US Federal Reserve (Fed) now expected to proceed gradually. Market players expect the central bank to trim the main rate benchmark by 25 basis points (bps) when it meets next week. As the dust settled, concerns receded. US indexes keep trading in the red, but trimmed half of their post-release losses, helping XAU/USD reconquer the $2,510 mark.  

The next first-tier event will take place on Thursday, as the European Central Bank (ECB) will announce its decision on monetary policy. Officials are widely anticipated to trim the three main interest rates by 25 bps each. If anything, a change in President Christine Lagarde’s usual wording can trigger action across financial markets.

XAU/USD short-term technical outlook  

From a technical point of view, the daily chart for the XAU/USD pair shows it remains on the bullish side despite the absence of upward momentum. The pair keeps trading above a bullish 20 Simple Moving Average, finding buyers around it. At the same time, the 100 and 200 SMAs maintain their bullish slopes far below the current level. Finally, technical indicators hold within positive levels, lacking evident directional strength yet maintaining the risk skewed to the upside.

In the near term, and according to the 4-hour chart, XAU/USD offers a neutral-to-bullish stance. The pair develops above converging 20 and 100 SMAs, at around $2,507.00, while technical indicators bounced from around their midlines, maintaining their upward slopes within positive levels.

Support levels: 2,507.60 2,489.60 2,475.70  

Resistance levels:  2,519.75 2,531.60 2,545.00