Gold Price Forecast: XAU/USD to extend range play near $1900, with focus on US inflation

• Gold price holds steady below $1900, sticking to the range play.
• Investors stay on the side-lines ahead of the key ECB decision, US CPI.
• Gold to remain at the mercy of the sentiment around the US dollar and T-yields.

Gold price (XAU/USD) tripped on Tuesday after two straight days of gains, as sellers lurked above the $1900 barrier. Much of the retreat could be attributed to a steady recovery in the US dollar across the board, which outweighed the weakness in the Treasury yields. Investors reassessed the prospects of the Fed’s hawkish monetary policy moves amid the acceleration in the prices and disappointing US NFP data. Further, gold price was weighed down by the sputtered negotiations between US President Joe Biden and Republican senator Shelley Capito over infrastructure investments.

However, renewed US-Sino tensions kept a floor under gold price. Reuters reported, “the US Senate on Tuesday voted 68-32 to approve a sweeping package of legislation intended to boost the country's ability to compete with Chinese technology.”

Gold price is holding a steady ground so far this Wednesday, nursing losses while trading well within Tuesday’s trading range. Gold’s range play near $1900 is likely to extend amid subdued trading action in the US dollar and Treasury yields, as the market switches to a wait-and-see mode ahead of the all-important US CPI data and ECB monetary policy announcement due on Thursday. The US inflation data could offer hints on when the Fed would scale back the monetary stimulus while the ECB is seen reviewing the pace of the emergency bond-buying program, which was boosted back in March.

Meanwhile, gold price showed little reaction to the mixed Chinese CPI and PPI data. Looking ahead, the sentiment around the greenback and yield will remain the key driver for gold price, as investors also keep an eye on stimulus and US-China updates.

Gold Price Chart - Technical outlook

Gold: Four-hour chart

Gold’s four-hour chart shows that the price continues to waver in a week-long symmetrical triangle formation but keep its range play intact over the past 12 hours.

The 50-simple moving average (SMA) at $1896 remains a tough nut to crack for the gold bulls.

Meanwhile, the downside is likely cushioned by the confluence of the triangle support, 100 and 21-SMAs at $1889.

The Relative Strength Index (RSI) holds steady above the midline, currently at 51.65, suggesting that the bulls could hold the upper hand in the day ahead.

Only a sustained break above the 50-DMA resistance could drive the buyers back towards the $1900 mark.

A four-hourly candlestick closing above the latter could trigger a triangle breakout, opening doors towards the multi-month highs of $1913.

Alternatively, a downside break from the symmetrical triangle will get validated on a firm break below the fierce $1890 support area, exposing the horizontal (orange) trendline hurdle at $1883.

Further south, the next cushion is aligned at $1866, the horizontal  (yellow) trendline support.