Gold Price Analysis: XAU/USD softens as inflation cools, $1,950 in sight

• Spot Gold is heading back towards $1,950 after getting sharply rejected from $1,975.
• Gold's latest rebound is running into friction after setting a six-day high.
• US data implying that inflation is cooling, which threatens XAU/USD's bullish stance.

Spot Gold bids are getting knocked back on Wednesday as buyers fail to hang onto $1,975. XAU/USD kicked the week off with a bullish rejection from $1,940, but Gold is now trading into the downside heading into the back half of the trading week.

Money markets are currently pricing in a 100% chance that the Federal Reserve (Fed) will be standing pat on rate hikes in December, and investors are currently pivoting towards expectations of when the US central bank will begin cutting interest rates.

Signs of cooling inflation and economic activity in the US is easing Fed expectations; US Core Producer Price Index (PPI) figures eased back to 2.4% for the year into October from the previous 2.7%, and US Retail Sales also ticked down to -0.1% in October, an overall decline in retail activity after September's 0.9% (revised from 0.7%).

XAU/USD Technical Outlook

Hourly candles see the XAU/USD knocking back into the 200-hour Simple Moving Average (SMA) after a failed bid for higher chart ground, slipping back from Wednesday's weekly high set at $1,975. The 50-hour SMA is showing a mixing of near-term momentum, consolidating with the longer moving average near $1,960.

On the daily candlesticks, the XAU/USD is churning after a bounce off the 200-day SMA is facing resistance early on. The 200-day and 50-day SMAs are consolidating around $1,930 as long-term momentum drains out of Spot Gold, and sellers will be looking for a break of last week's bottom bids near $1,930 while the topside target remains late October's high-water mark etched in just north of the $2,000 major handle.

XAU/USD Hourly Chart

XAU/USD Daily Chart

XAU/USD Technical Levels