Gold Price Forecast: XAU/USD bounces to near $1,850, investors await US inflation

• Gold price has tumbled to near $1,850.00 on rising odds of a jumbo rate hike by the Fed.
• The market participants may get divided on upbeat NFP and lower inflation forecasts.
• Descending EMAs and weak RSI (14) are indicating more downside for the yellow metal.

Gold Price (XAU/USD) has witnessed a minor bounce after slipping near the previous week’s low at $1,850.47. A minor responsive buying has been observed yet but value buying can drive the asset higher. The bright metal has displayed a sheer downside on Monday amid broader strength in the US dollar index (DXY).

Investors are aware of the fact that upbeat US Nonfarm Payrolls (NFP) has bolstered the odds of a rate hike by the Federal Reserve (Fed) in June. The US Bureau of Labor Statistics disclosed 428k job additions in the labor force against the expectations of 391k. Higher job creation has signaled a tight labor market that may compel the Fed to come forward with one more 50 basis points (bps) interest rate hike. On the other hand, US inflation is seen lower at 8.1% against the multi-decade high of 8.5%.  A lower US inflation print could dictate not so aggressive monetary policy by the Fed.

Considering the rally in the DXY, it is very much clear that investors are underpinning an upbeat NFP rather than a softer Consumer Price Index (CPI).

Gold technical analysis

The precious metal is hovering near its critical support which coincides with January’s high and the previous week’s low at $1,854.20. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,872.84 and $1,883.61 respectively are sloping downwards, which adds to the downside filters. Meanwhile, the Relative Strength Index (RSI (14) has slipped below 40.00, which signals a firmer downside move ahead.

Gold four-hour chart