Gold Price Forecast: XAU/USD stretches rangebound auction below $1,880 ahead of US Inflation

• Gold price has continued to trade sideways further around $1,880.00 as the focus has shifted to US inflation data.
• Only a stronger-than-expected US CPI would avoid a slide to fresh lows for the USD Index.
• Lower wage inflation and weaker PMI numbers have forced Fed policymakers to revise their viewpoint on policy projections.

Gold price (XAU/USD) is struggling to find a direction amid a quiet market mood. The precious metal is oscillating below $1,880.00 as investors are likely to restrict themselves from making significant positions before the release of the United States Consumer Price Index (CPI) data.

The continuous struggle from the US Dollar Index (DXY) in reclaiming the 103.00 resistance is portraying the absence of volatility in the market. Also, S&P500 futures are almost trading flat, holding on to Tuesday’s gains. The 10-year US Treasury yields have slipped below 3.59%.

The USD Index has been beaten down by the market participants after a sheer drop in wage inflation and economic activities, which has forced Federal Reserve (Fed) chair Jerome Powell and his teammates to reconsider their viewpoint over terminal rate projections and the pace of hiking interest rates ahead. Investors will get more clarity after the release of Thursday’s inflation data, which is expected to trim further.  

According to the economists at MUFG Bank, only a stronger-than-expected US Consumer Price Index (CPI) on Thursday would avoid a slide to fresh lows for the USD Index.

Gold technical analysis

Gold price is demonstrating an inventory adjustment phase after a firmer rally on an hourly scale. The precious metal might display a decisive move after the release of US inflation data, therefore it is difficult to term it an accumulation or a distribution. The 20-period Exponential Moving Average (EMA) at $1,875.50 is providing support to the Gold bulls. While the 50-EMA at $1,871.90 is still untouched, which indicates that the upside bias is still solid.

The Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which indicates an absence of a critical trigger for a decisive action

Gold hourly chart