Gold Price Forecast: XAU/USD oscillates in a range as traders await US CPI report

• Gold struggles to gain any meaningful traction and remains confined in a range on Tuesday.
• The risk-on impulse, elevated US bond yields seem to act as a headwind for the commodity.
• The prevalent USD selling bias continues to offer support ahead of the crucial US CPI report.

Gold lacks any firm direction on Tuesday and seesaws between tepid gains/minor losses, above the $1,720 level through the early European session. The XAU/USD remains below a nearly two-week high touched the previous day as investors now await the latest US consumer inflation figures for a fresh impetus.

A survey released by the Federal Reserve Bank of New York on Monday showed that consumer expectations for US inflation over the coming years declined sharply to the lowest level since October last year. Hence, the US CPI report will be looked upon for signs of a sustained decline in US inflation. This could raise expectations for less aggressive policy tightening by the Fed, which, in turn, could help gold to gain some meaningful traction.

In the meantime, the risk-on mood - as depicted by a positive tone around the equity markets - is seen acting as a headwind for the safe-haven precious metal. This, along with elevated US Treasury bond yields, contributes to capping the upside for gold. The US dollar, meanwhile, languishes near the monthly low touched the previous day and might continue to lend some support to the dollar-denominated commodity, at least for the time being.

Heading into the key data risk, investors also seem reluctant to place aggressive bets around gold and prefer to move to the sidelines. This is seen as another factor leading to subdued/range-bound price action and warrants caution before positioning for an extension of the recent recovery from the sub-$1,700 round-figure mark.

Technical levels to watch