Gold Price Forecast: XAU/USD spiked to the 100-DMA on high US CPI figure, retreated towards $1780s

Gold (XAU/USD) vs. the US Dollar is rallying during the New York session, up some 0.27%, trading at $1,780 at the time of writing. Inflation in the US climbed to its fastest annual rate since 1982. US equity futures reacted to the upside, while the US 10-year benchmark note fell to 1.47%, while the US Dollar Index held at the 96.00 threshold.

US Consumer Price Index hits the highest level since the early 1980s

On Friday, the US Bureau of Labor Statistics (BLS) reported that the Consumer Price Index for November annually based rose by 6.8%, in line with estimations, though higher than October’s 6.2%. Excluding volatile items like food and energy, the so-called Core Consumer Price Index for the same period came at 4.9%, as widely expected, trailed by October’s figure, which increased up to 4.6%.

The report further cemented the intentions of the Federal Reserve to increase the pace of the bond taper, as mentioned by US central banks policymakers in the last week. Led by Fed’s Chair Jerome Powell, he noted that favors a faster QE’s reduction and emphasized that he would “speak about it” at the next meeting, in the next week, on December 15-16.

In the overnight session ahead of the US Consumer Price Index, gold seesawed around $1,778, the central daily pivot point, followed by an $8 slide towards the December 9 daily low around $1,770. Once the inflation headline crossed the wires, gold printed a $19 spike up to $1,790, near the 100-day moving average (DMA), to retreat down to familiar levels around high $1,770s.

In the meantime, US bond yields got hit at the CPI release, though at press time, it seems that once market participants dissected the report, US bond yields in 2s, 5s, and 10s, are almost flat at 0.6825%, 1.2581%, and 1.48%, respectively. Following the US Treasuries path, the US Dollar Index also dropped, around the 96.00 figure, but it appears to have recovered previous losses, down 0.01%, sitting at 96.26.

XAU/USD Price Forecast: Technical outlook

In the hourly chart, gold is trading around the simple moving averages (SMA’s), which are in a narrow  $2 range within the $1,779-82 area. Furthermore, the central daily pivot around $1,778.50 lies below that range, meaning it would be solid support for USD bulls to overcome.

The first resistance on the way up would be the December 9 high at $1,787. A breach of the latter would expose the confluence of the 100-day moving average (DMA), the R2 daily pivot, and the December 8 high around $1,792.

On the flip side, the central daily pivot at $1,778.50 would be the first support. If USD bulls push the price further down, that will expose the December 9 low at $1,773, followed by the S1 daily pivot at $1,769.