Gold Price Forecast: XAU/USD declines as bears gather traction ahead of US CPI

In Friday's session, the XAU/USD was observed at a trading level of $2,025, marking a dip of 0.40%. Focus is set on next week’s Consumer Price Index (CPI) figures from January after the US downwardly revised the December figures, to continue placing their bets on the next Federal Reserve (Fed) decisions.

In that sense, investors are eyeing the Federal Reserve's moves, as soft CPI revisions seem to have provided a breather for officials considering rate cuts. However, strong Q1 growth predictions in the US market and rising wage pressures amidst a tight job market from the Fed indicate that rate cuts may be delayed. As for now, markets seem to have given up the odds of a cut in March and instead pushed them to May. Next week's inflation reading will be key for the timing of the easing cycle and in case, data justifies the delay of rate cuts, the yellow metal metal may see further downside

XAU/USD technical analysis

Technical indicators on the daily chart initially depict a dominance of selling pressure. The Relative Strength Index (RSI) is on a descending slope and is hovering in the negative domain, suggesting that bearish momentum is currently prevailing. Simultaneously, the Moving Average Convergence Divergence (MACD) displays growing red bars, reinforcing the strength of the selling momentum. However, the broader perspective reveals a different story. Despite the metal trading under the 20-day Simple Moving Average (SMA), it remains comfortably positioned above the 100 and 200-day SMAs. This inclination highlights the dominance of buying interest in the broader context but that the bears are steadily gaining ground in the short term.

XAU/USD daily chart

Turning attention to the four-hour chart, the selling and buying forces appear to have temporarily reached a stalemate. The indicators have flatlined, illustrating a phase of consolidation following recent losses. The Relative Strength Index (RSI) is notably flat, entrenched within the negative zone, which might hint at a persisting bearish sentiment. The Moving Average Convergence Divergence (MACD) also insinuates a slight shift in momentum with flat red bars, proposing the possibility of a period of consolidation.