Gold Price Forecast: XAU/USD auctions below $1,750 on higher expectations for US Inflation

Gold price (XAU/USD) is displaying back-and-forth moves in a narrow range of $1,742.93-1,744.62 in the Asian session. The precious metal is auctioning below the round-level resistance of $1,750.00 as the market participants are expecting an acceleration in the price pressures.  

The gold prices may face severe heat as the higher inflation print by the US Bureau of Labor Statistics will strengthen the greenback. As per the market consensus, the US Consumer Price Index (CPI) is seen higher at 8.7% than the prior estimate of 8.6%. This will compel the Federal Reserve (Fed) to feature a consecutive 75 basis point (bps) interest rate hike.

However, the inflation rate in conjunction with the lower Average Hourly Earnings is not painting a rosy picture for the greenback. Soaring price pressures are highly required to be equalized with higher earnings and stagnancy in the wage rates is hurting the ‘paychecks’ of the households. This may have a significant impact on the aggregate demand as lower-valued paychecks will result in lower consumption and savings for the households.

Gold technical analysis

On an hourly scale, the gold prices have turned sideways in a range of $1,730.73-1,752.49 after a downside move. The 20-period Exponential Moving Average (EMA) at $1,742.35 is overlapping with the prices of the precious metal. Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which bolsters the odds of consolidation ahead.

Gold hourly chart