Gold Price Forecast: XAU/USD bulls await United States inflation, Federal Reserve Minutes for fresh rally

Gold price (XAU/USD) grinds higher past $2,000, mildly bid near $2,005 during early Wednesday in Asia. In doing so, the bright metal cheers a broad US Dollar weakness while also portraying the market’s cautious mood ahead of the top-tier data/events during a sluggish session. It’s worth noting, however, that the recent reduction in the hawkish Federal Reserve (Fed) bias joins mixed comments from the Fed policymakers and the International Monetary Fund (IMF) to weigh on the US Dollar and propel the Gold price.

Gold price rises as US Dollar retreats despite static United States Treasury bond yields

Gold price has an inverse relationship with the US Dollar Index, which in turn takes clues from the US Treasury bond yields and hence becomes crucial to watch for short-term Gold price directions.

US Dollar Index (DXY) holds lower grounds near 102.10 early Wednesday, following the U-turn from a one-week high, as well as snapping a four-day winning streak, the previous day. That said, the US 10-year and two-year Treasury bond yields grind higher around 3.43% and 4.03 during a four-day and five-day uptrend respectively.

As a result, the recently firmer US Treasury bond yields seem to prod the Gold price even if the US Dollar weakness puts a floor under the XAU/USD price.

Federal Reserve talks, interest rate futures prod USD bulls

While tracing the recent moves of the US Dollar, the United States Treasury bond yields and the Gold price, the mixed comments from the Federal Reserve (Fed) Officials and interest rate futures gain major attention.

On Tuesday, Philadelphia Fed President Patrick Harker said that the Federal Reserve will continue to look closely at available data to determine what, if any, additional actions they may need to take. Before him, New York Fed President John Williams said that if inflation comes down, we will have to lower rates. Furthermore, Chicago Fed President Austan Goolsbee, said on Tuesday that they need to be cautious about raising interest rates after recent development in the banking sector.

On the other hand, the CME’s FedWatch Tool signals a 64% chance of a 0.25% Fed rate hike in May versus 72.0% a day before.

Hence, the indecision among the Fed policymakers join the recently easy hawkish Fed bets to propel the Gold price ahead of the top-tier data/events.

China, IMF news tests XAU/USD buyers ahead of the key catalysts

While the aforementioned catalysts support the Gold price upside, headlines surrounding China and updates from the International Monetary Fund (IMF) prod the metal buyers.

That said, the IMF revised down global real Gross Domestic Product (GDP) growth forecast for 2023 to 2.8% from 2.9% in January's report. The global lender, however, forecasts 2023 US GDP growth at 1.6% vs 1.4% expected in January. “The International Monetary Fund warned on Tuesday that lurking financial system vulnerabilities could erupt into a new crisis and slam global growth this year, but urged member countries to keep tightening monetary policy to fight persistently high inflation,” said Reuters.

It should be noted, however, that the IMF kept its growth estimations for China intact at 5.2% for 2023 and 4.5% for 2024 while suggesting the faster-than-expected growth pace at the world’s largest industrial player, as well as one of the biggest Gold consumers.

Alternatively, the IMF’s support to the fight against inflation and fears of easy global growth, as well as the US-China tension, challenge the XAU/USD bulls amid dicey markets ahead of the US Consumer Price Index (CPI) for March and the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting.

US inflation, Fed Minutes will be the key for Gold traders to watch

Gold price grinds higher as traders await United States inflation and the Fed Minutes amid expectations of further easy price pressure in the world’s largest economy likely pushing back the hawkish policy bias. That said, market forecasts suggest the headlines CPI to ease to 5.2% YoY versus 6.0% prior while the FOMC Minutes need to defend the rate hike trajectory to stop the Gold buyers from challenging the all-time high marked in 2020 around $2,075.

Also read: Gold Price Forecast: XAU/USD regains $2,000 despite a better market mood

Gold price technical analysis

Gold price grinds higher past the $1,981-80 support confluence comprising the three-week-old previous resistance line, 23.6% Fibonacci retracement of the March-April upside and the 100-bar Simple Moving Average (SMA).

In doing so, the XAU/USD justifies an upside break of a one-week-old descending trend line, now immediate support near $1,994.

Adding strength to the upside bias is the steady Relative Strength Index (RSI), placed at 14, and the receding strength of the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator.

With this, the Gold price is well-set to challenge the 13-month high marked in the last week at around $2,032. Following that, the 61.8% Fibonacci Expansion (FE) of the metal’s moves between March 08 and 21, near $2,048, can act as an intermediate halt during the likely run-up towards the previous yearly peak close to $2,070 and then challenge the all-time high near $2,075 marked in 2020.

Alternatively, a downside break of the immediate support line near $1,994 may direct Gold sellers toward challenging the $1,981-80 support confluence.

It’s worth noting, however, that the XAU/USD weakness past $1,980 can quickly fetch the Gold price towards the 38.2% Fibonacci retracement level surrounding $1,947.

Overall, the Gold price is well set for the upside as traders await the key fundamental catalysts of the week.

Gold price: Four-hour chart

Trend: Further upside expected