Gold Price Forecast: XAU/USD slides below $1,670 hurdle ahead of Fed’s preferred inflation gauge

• Gold price takes offers to refresh intraday low, pares weekly gains.
• DXY traces yields to extend previous day’s rebound ahead of US Core PCE Inflation data for September.
• Risk remains sour amid inflation/growth fears even as central bank policy hawks retreat.

Gold price (XAU/USD) consolidates the second weekly upside as bears poke the $1,658 level heading into Friday’s European session. In doing so, the yellow metal traces the recent downside in commodities and Antipodeans amid the US dollar’s rebound.

That said, the US Dollar Index (DXY) picks up bids to extend the previous day’s gains to 110.65 as the US 10-year Treasury yields rebound to 3.94%. Even so, the benchmark bond coupons snap a 10-week uptrend, which in turn favored equities and gold prices earlier in the week.

While seeking clarifications, the market’s anxiety ahead of the US Core PCE Price Index for September, expected to rise to 5.2% versus 4.9% prior, could be considered important due to the recent retreat in the hawkish Fed bets. The inflation number and the market’s wagers on the Fed’s next move become all the more important as the chatters surrounding the Fed’s easy rate hike in December grow stronger.

Other than the DXY rebound, economic fears surrounding China, one of the world’s biggest commodity user, join the geopolitical fears about Ukraine to exert downside pressure on the XAU/USD prices. “The International Monetary Fund (IMF) cut Asia's economic forecasts on Friday as global monetary tightening, rising inflation blamed on the war in Ukraine, and China's sharp slowdown dampened the region's recovery prospects, “ said Reuters.

Amid these plays, the stock futures are red following the downbeat performance of Wall Street while the bond markets pare recent gains.

Moving on, the US inflation data and the pre-Fed jitters could entertain XAU/USD bears amid a likely active session.

Technical analysis

Gold price remains downbeat inside a three-day-old bearish channel as sellers poke the $1,657 intermediate support comprising the 100-HMA.

Given the downbeat RSI (14), not oversold, coupled with the bearish chart formation, the XAU/USD weakness is likely to persist. That said, the stated channel’s lower line, near $1,653, precedes the 200-HMA level of $1,649 to restrict the short-term downside.

Meanwhile, a convergence of the stated bearish channel and the previous support line from the last Friday offers a tough nut to crack for the gold buyers around $1,670.

Following that, the recent swing high near $1,675 can act as an extra filter to the north before directing buyers towards the monthly peak of $1,730.

Gold: Hourly chart

Trend: Limited downside expected