Gold Price Forecast: XAUUSD refreshes 2 ½ month highs, eyeing the 200-DMA

• Gold prices marched firmly following the release of a soft United States Consumer Price Index in October.
• The US Dollar extends its weekly losses, down 3.31%.
• Federal Reserve policymakers agreed to slow down the pace of rate hikes and clarified they’re not easing policy.

Gold price advances steadily in the North American session, clinging to its Thursday gains. Factors like a  softer US Consumer Price Index (CPI) report, and China’s relaxing some Covid-19 restrictions, were cheered by investors, as shown by US equity futures trading in the green. At the time of writing, the XAUUSD is trading at $1761, above its opening price, after hitting a daily low of $1747.

Gold gains as speculations for a less aggressive Fed, augmented

US equities are set for a higher open, as shown by the futures market. The crypto turmoil keeps the Nasdaq pressured, as FTX began the chapter 11 process, but an optimistic US inflation report augmented speculations for a less aggressive Federal Reserve (Fed). The October US inflation report showed that headline and core CPI’s, albeit above the Fed’s target, eased compared with the last month’s figures. US CPI rose by 7.7% YoY, below estimates of 7.9% and core CPI, which excludes volatile items and was bucking the CPI downtrend, fell to 6.3% YoY, below the 6.5% expected.

Gold’s reacted positively to the report and finished Thursday’s session at $1757, for a 2.86% gain. Contrarily, US Treasury bond yields plunged, with the US 10-year Treasury yield dropping 28 bps, closing at 3.829%. Of note, the US bond market will be closed on Friday in observance of the Veteran’s Day Holiday.

Following the data release, a slew of Federal Reserve officials commented that it was “appropriate” to slow the pace of interest-rate hikes. Nevertheless, most of them commented that the Fed is still tightening monetary policy, as the Dallas Fed President Lorie Logan said that “a slower pace should not be taken to represent easier policy.”

Meanwhile, the CME FedWatch Tool shows investors expect the Fed to lift rates by 50 bps in its December meeting, as chances lie at 85.4%, unchanged from Thursday.

Of late, crossing newswires, the US Treasury Secretary and former Federal Reserve Chair Janet Yellen said October’s inflation reading was positive. Still, she cautioned that core CPI was lower, but shelter prices remain high.

Ahead in the US calendar, the University of Michigan (UoM) Consumer Sentiment will be informed at 15:00 GMT, with expectations lying at 59.5, and inflation expectations will be updated.

Gold Price Analysis: Technical outlook

The XAUUSD is testing the August 25 daily high at $1765.48. After hitting a daily high of $1766.62, the yellow metal slid below the latter, and Gold remains above Thursday’s $1757.26 high. Of note, the Relative Strength Index (RSI), at bullish territory, suggests further upside ahead. However, as traders are bracing for the weekend, XAUUSD might consolidate in the $1757-$1766 range.

XAUUSD’s first resistance level would be $1765.48. Break above will expose the $1800 figure, followed by the 200-day Exponential Moving Average (EMA). On the downside, the XAUUSD’s first support would be Thursday’s high at $1757.26, followed by the $1750 psychological level and the August 22 swing low at $1727.80.