Gold Price Forecast: XAU/USD bulls and bears go head to head in the build up to the Fed

• Gold price is on the verge of a breakout and all eyes are on the Fed. 
• Bears are creeping on the backside of the prior bullish trend.

Gold price is firm in Tokyo as the focus stays on the Federal Reserve later today and following the US inflation report that gave something for both the bears and bulls. At the time of writing, XAU/USD is trading higher by some 0.13% and has risen from a low of $1,942.31 to reach a high of $1,946.89 so far.

The yellow metal gained overnight following the fall in US inflation. On Tuesday, data showed that the US Consumer Price Index edged up 0.1% last month after increasing 0.4% in April, core CPI increased 0.4% in May, rising by the same margin for the third straight month.

The US Dollar took a disliking to the data initially, however, the Greenback pared back initial knee-jerk losses due to the core. Investors are of the mind that the core is still too high to be compatible with the Fed's 2% inflation target, thus there are still chances that the FOMC will justify another 25-bp rise at the outcome of the FOMC meeting. Additionally, Gold price gains were given up amid concerns that any pause from the Fed is likely to be short-lived, with the possibility the central bank remains hawkish.

Analysts at TD Securities offered three scenarios as follows:

Base case:

Hawkish:

Dovish:

Gold technical analysis

The Gold price slid to the backside of the bullish trend but it is still stuck between key breakout support and resistance as illustrated in the daily and 4-hour charts above. The Fed may have the power to move the needle one way or the other, especially in an asymmetrical outcome for the US dollar.