Gold Price Forecast: XAU/USD awaits US inflation to break the monotony around $1,850

• Gold remains pressured after snapping two-day uptrend the previous day.
• US dollar strength weighs on metal prices but traditional safe-haven status argues with bears.
• China inflation numbers, covid updates can entertain traders ahead of US CPI data.

Gold (XAU/USD) traders keep the previous day’s bearish bias while refreshing the intraday low at around $1,845 during Friday’s Asian session as risk-aversion remains in play.

The risk-off mood could be linked to the growing concerns that the surging price pressure to challenge the global economic growth; Additionally weighing the XAU/USD is the cautious mood ahead of the key inflation data from China and the US. It’s worth noting that the European Central Bank (ECB) failed to lift the market’s optimism despite announcing an end to the Quantitative Easing (QE) and a 0.25% rate hike in July.

That said, the White House has already conveyed the risk of higher inflation ahead of today’s US Consumer Price Index (CPI) data while the World Bank (WB) and the Organisation for Economic Co-operation and Development (OECD) have amplified the global recession woes. Furthermore, the return of activity restrictions and mass testing in China, due to the resurgence of covid cases, also weighs on the market sentiment and the gold prices.

Against this backdrop, the Wall Street benchmarks dropped the heaviest in the week whereas the US 10-year Treasury yields also refreshed their monthly high before retreating to 3.04%, around 3.057% at the latest. Further, the US Dollar Index (DXY) also rallied the most in a week while cheering the greenback’s safe-haven status.

Moving on, China’s CPI and Producer Price Index (PPI) data for May, expected 2.2% and 6.4% versus 2.1% and 8.0% in that order, will offer immediate directions to the gold traders ahead of the US CPI. Also important to watch will be the chatters surrounding covid and global economic growth.

Technical analysis

Gold’s sustained trading below a two-day-old resistance line, as well as the convergence of the 200 and 50 HMAs, join steady RSI (14) to keep sellers hopeful.

However, a one-week-old support line near $1,843 tests the pair bears ahead of directing them to the monthly low surrounding $1,828. Following that, the $1,810 and the $1,800 can as the last defenses for the gold buyers.

Alternatively, the aforementioned nearby resistance line, at $1,849 by the press time, precedes the HMA confluence near $1,851 to challenge the precious metal’s recovery. Also acting as an upside barrier is the weekly resistance line surrounding $1,855.

Overall, gold prices eye further downside but needs a trigger to activate the sell-off.

Gold: Hourly chart

Trend: Further weakness expected