Gold Price Forecast: XAU/USD dwindles below $1,800 as markets await US inflation
- Gold teases bears of late, consolidates the previous day’s gains inside a familiar range.
- Fed tapering chatters underpin US dollar ahead of inflation data.
- Bear cross on the 4H, fears reflation fears keep gold sellers hopeful.
- Gold Price Forecast: XAU/USD holds above $1780, capped by $1800
Gold (XAU/USD) picks up bids to $1,793, down 0.05% intraday, as the sluggish Asian session on Tuesday teases bears ahead of the European traders’ arrival.
The precious metal initially cheered risk-on mood before the cautious sentiment ahead of the US Consumer Price Index (CPI) data weighs on the gold prices inside a familiar trading range between $1,782 and $1,804, established since nearly a week.
Market sentiment sours as the eight-year high US inflation expectations signal reflation fears amid concerns. Today’s US CPI for August becomes the key for the Fed policymakers when they meet the next week. At the latest, Philadelphia Federal Reserve Bank President Patrick Harker pushed for the sooner tapering but refrained from confirming the next move.
It’s worth noting that Goldman Sachs’s lack of belief in US President Joe Biden’s six-pronged strategy to battle the virus joins the geopolitical fears over the relating to the hurricane Nicholas to also weigh on the sentiment. Additionally, the US-China rift over renaming the Taipei red office and Europe’s search to defend against the Taliban also underpin the US dollar’s safe-haven demand and weigh on gold prices.
Amid these plays, the US Dollar Index (DXY) remains unchanged, recovering intraday losses, by the press time whereas the US 10-year Treasury yields rise 0.7 basis points to 1.33%. Further, the Wall Street benchmarked closed mixed but the S&P 500 Futures print mild gains by at the latest.
Moving on, virus woes and geopolitics can entertain gold traders. However, major attention will be given to the US inflation figures as they help forecast the next weeks’ Fed move.
Read: US Inflation Preview: CPI critical for taper, three scenarios for the dollar
Technical analysis
Gold fades bounce off monthly support line as the short-term Simple Moving Averages (SMAs) cast doubts on the metal’s strength. That said, sluggish MACD signals and the Momentum line also challenges the buyers.
Hence, the metal’s further weakness towards retesting the ascending support line from August 19, near $1,784 becomes imminent. However, the recent lows surrounding $1,782 adds to the downside filters before confirming the bearish move towards August 09 swing high near $1,752.
Alternatively, recovery moves need a sustained run-up beyond the 50 and 100-SMA convergence near $1,804 to confirm the upside momentum targeting the monthly high near $1,834.
Overall, gold traders are bracing for an entry but seek assurance before the key US inflation data.
Gold: Four-hour chart
Trend: Further weakness expected