Gold Price Forecast: XAU/USD trapped between $1,840-65 amid RSI’s overbought conditions

Gold (XAU/USD) is steady during the New York session, up some 0.50%, trading at $1,861 at the time of writing. During the Asian session, it seems that gold bulls bought the dip, as witnessed by the 1-hour chart, as XAU/USD consolidated around the  $1,840-50 area, before resuming the upward move, which stalled around the $1,860s tops-

The market sentiment is mixed after hotter-than-expected US inflation figures unveiled on Wednesday. In fact, the headline US CPI number on a yearly basis spiked above 6% for the first time in three decades. This spurred appetite for precious metals, which have been an inflation hedge over time, with gold and silver rallying in the last couple of days.

Overall, US dollar strength has not been an excuse for the yellow metal to rise. Furthermore, the US 10-year Treasury yield rose above 1.50%, which could usually exert pressure on gold prices; however, real yields are the main driver for gold. As of November 10, real yields sit at -1.85%; therefore, as long as real yields keep falling, gold would maintain an upward bias.

The US economic docket will be light on Thursday in observance of the Veterans Day holiday. On Friday, the University of Michigan Consumer Sentiment Index for November could offer gold traders a fresh impetus to take action. Also, New York Fed’s President John Williams will speak at a virtual event hosted by the New York Federal Reserve.

XAU/USD Price Forecast: Technical outlook

Gold keeps trading above a 4-month downslope resistance trendline, broken on Wednesday, steady around tops $1,860s. The daily moving averages (DMA’s) were left behind the spot price, meandering around the $1,780-95 area, with the 50-DMA aiming higher, while the longer time-frames one directionless. 

Further, the Relative Strength Index (RSI) is at 70, inside overbought conditions, confirming that the upward move might ease before resuming to the upside. However, for XAU/USD bulls to accelerate an attack towards $1,900, they will need a daily close above the June 3 low at $1,864.98. In that outcome, the following resistance area would be the psychological $1,900.

On the flip side, the September 3 high at $1,834 would be the first support area, that once breached, would open the door for a further downfall towards $1,800.