Gold Price Forecast: XAU/USD shows volatility contraction above $1,860 ahead of US Inflation

Gold price is inside the woods above $1,860.00 as investors await US inflation for fresh cues.
Fed's Harker sees interest rates above 5% this year as inflation is still elevated.
The monthly headline and core CPI are expected to deliver an expansion by 0.4%, according to a Reuters poll.

Sagar Dua FXStreet

Gold price (XAU/USD) is demonstrating a decline in volatility ahead of the United States inflation data for fresh impetus. The precious metal is displaying a back-and-forth motion above $1,860.00. However, the downside looks favored amid a sheer decline in the risk appetite of the market participants.

The US Dollar Index (DXY) is struggling to deliver a break above the critical resistance of 103.35 in the Asian session. S&P500 futures have added losses further as disappointment from quarterly earnings has faded optimism for the risk-perceived assets. Also, back-to-back events of shooting down unidentified flying objects on the radar of the Pentagon have dampened the market mood. The alpha created on the 10-year US government bonds has dropped marginally below 3.74%.

Renewed concerns of further interest rate hikes by the Federal Reserve (Fed) have spooked market sentiment. Philadelphia Fed President Patrick Harker sees interest rates above 5% this year as inflation is still elevated. He believes higher interest rates should remain for longer to achieve price stability.

The US Consumer Price Index (CPI) release will provide confident guidance on interest rates. As per the consensus, monthly headline and core CPI are both expected to deliver an expansion by 0.4%, according to a Reuters poll.

Gold technical analysis

Gold price has tested the breakdown of the Inverted Flag chart pattern on a two-hour scale with weak buying strength. The yellow metal will likely display a perpendicular downside ahead after the asset comes out of balance.

The 20-period Exponential Moving Average (EMA) at $1,866.07 is barricading Gold bulls, which indicates more weakness ahead.

Meanwhile, the Relative Strength Index (RSI) (14) is hovering near 40.00. A breakdown into the bearish range of 20.00-40.00 will activate the downside momentum.

Gold two-hour chart

XAU/USD

Overview
Today last price	1863.14
Today Daily Change	-1.19
Today Daily Change %	-0.06
Today daily open	1864.33

Trends
Daily SMA20	1909.06
Daily SMA50	1855.63
Daily SMA100	1776.55
Daily SMA200	1775.81

Levels
Previous Daily High	1872.33
Previous Daily Low	1852.84
Previous Weekly High	1890.27
Previous Weekly Low	1852.84
Previous Monthly High	1949.27
Previous Monthly Low	1823.76
Daily Fibonacci 38.2%	1864.88
Daily Fibonacci 61.8%	1860.29
Daily Pivot Point S1	1854
Daily Pivot Point S2	1843.68
Daily Pivot Point S3	1834.51
Daily Pivot Point R1	1873.49
Daily Pivot Point R2	1882.66
Daily Pivot Point R3	1892.98

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

AUD/USD stays defensive below 0.7150 after Chinese data

AUD/USD remains on the back foot below 0.7150 in the Asian session on Tuesday, close to an over three-week low touched the previous day. US bond yields hold near multi-year highs ahead of the FOMC meeting and oil-driven inflation risks, supporting the US Dollar and weighing on the currency pair. Mixed Chinese activity data for August also fail to inspire the Aussie.

USD/JPY extends gains toward 155.00 amid USD resurgence

USD/JPY keeps pushing higher toward 155.00 early Tuesday, looking for more upside, as traders await the FOMC and BoJ meetings this week. Meanwhile, Fed rate-hike bets and oil-driven inflation risks keep US bond yields near multi-year highs, supporting the US Dollar and the pair. That said, a more hawkish repricing of the BoJ normalization path might continue to underpin the Japanese Yen and could limit USD/JPY's upside. .

Gold struggles near multi‑week low as Fed hike bets and geopolitical risks boost USD

Gold drifts lower for the second straight day, and trades around the $4,265-$4,264 region, down 0.80% during the first half of the European session on Tuesday. The commodity remains within striking distance of an over one-month low, which it touched on Monday, as traders keenly await the crucial two-day FOMC policy meeting, starting later today.

Dogecoin clings to EMA support as recovery lacks conviction

Dogecoin (DOGE) hovers around $0.083 at the time of writing on Tuesday after finding support around the key support zone the previous day. Quiet institutional demand, along with mixed derivatives positioning, suggests fading interest in the dog-themed meme coin.

Markets slide as FOMC approaches

The US Dollar remains strong as markets turn increasingly cautious ahead of the FOMC. Stocks are tumbling, while Gold and Silver are moving lower under pressure from the stronger Dollar. The Japanese Yen is weaker again, while Crypto is correcting. BTC is approaching a key technical test and could fall below its 50-week moving average, while ETH remains above $2,405.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.