Gold Price Forecast: XAU/USD attracts some sellers above the $2,000 mark ahead of US CPI data

• Gold price faces some selling pressure around $2,018 in Tuesday’s early Asian session. 
• Several Fed officials emphasized last week that further evidence of progress on inflation is needed before cutting rates.
• More stimulus announcements from China might boost the gold price. 
• The US January Consumer Price Index (CPI) will be the highlight on Tuesday. 

Gold price (XAU/USD) trades in negative territory for the fifth consecutive day during the early Asian session on Tuesday. The high-for-longer rate narrative from the US Federal Reserve (Fed) exerts some selling pressure on the non-yielding yellow metal. Investors await crucial US inflation data, which could provide some insight into the next steps the Fed takes on interest rates. The gold price currently trades near $2,018, down 0.06% on the day. 

Meanwhile, the US Dollar Index (DXY), an index of the value of the USD measured against a basket of six world currencies, consolidates around 104.12. The US Treasury yields edge higher, with the 10-year yield standing at 4.17%.

Several Federal Reserve (Fed) officials emphasized last week that further evidence of progress on inflation is needed before cutting rates. The January CPI data on Tuesday will be key data, which is projected to show an increase of 0.2% MoM and 3.0% YoY. The Core CPI excludes volatile food and energy prices and is estimated to show an increase of 0.3% MoM and 3.8% YoY. Fed Funds futures have priced in 107 basis points (bps) or about 1% in rate cuts for 2024, down from 158 bps less than a month ago.

Mainland China's financial markets are closed this week for the Lunar New Year holidays. China's inflation fell by 0.8% year on year in January, the greatest decline in 15 years. This highlights the possibility of deflation in the world's second-largest economy. Nonetheless, the downside of gold might be capped due to the additional stimulus measures from Chinese authorities to boost the market. 

Gold traders will closely monitor the US January Consumer Price Index (CPI) on Tuesday. On Thursday, the US Retail Sales will be released. Traders will take cues from the data and find trading opportunities around the gold price.