Gold Price Forecast: XAU/USD gains momentum above $2,350, investors await US CPI data

Gold Price (XAU/USD) extends its upside near $2,355 during the early European trading hours on Wednesday. The uptick of yellow metal is bolstered by the expectation of rate cuts from the Federal Reserve (Fed) this year, central bank purchases, and geopolitical tensions in the Middle East. 

On Wednesday, Israeli foreign minister Israel Kat warned that Israel will retaliate if Iran attacks from its territory. Earlier, Iran's supreme leader said Israel "must be punished" for an apparent attack on an Iranian consulate building in Syria last week, which killed two of its senior military commanders, per Sky News. The escalating geopolitical tensions in the Middle East might boost safe-haven assets like gold. 

Furthermore, the gold purchase from major central banks lifts the yellow metal to nearly an all-time high. China added 160,000 troy ounces of gold to its reserves in March, the 17th consecutive month. Turkey, India, Kazakhstan, and some eastern European countries also buying gold this year, along with China.

Gold traders will closely monitor the US Consumer Price Index (CPI) data for March and the FOMC Minutes, due on Wednesday. These events could provide some insights about the inflation trajectory and the path of the Fed’s monetary policy. The firmer inflation reading might dampen expectations for Fed rate cuts in June and cap the gold’s upside. On the other hand, the softer inflation data could fuel speculation for rate reductions and provide some support to XAU/USD.