Gold Price Forecast: XAU/USD advances as the greenback retreats, bulls eye $1834

• The yellow-metal rallies for the fourth day out of the last five despite that US inflation cements Fed hikes.
• US: The Consumer Price Index (CPI) for December increased the most since 1982.
• XAU/USD Technical Outlook: It is neutral-bullish, but gold bulls beware of the fundamental outlook and the US economy developments.

Gold (XAU/USD) extends its rally during the week, buoyed for the fourth consecutive day as the Bureau of Labor Statistics (BLS) revealed that US inflation reached the highest level since 1982. At the time of writing, XAU/USD is trading at $1,826 during the New York session.

The market’s reaction to the US CPI headline figure was adverse, despite further cementing that the Fed would need to hike rates faster than estimated. The US 10-year Treasury yield is down almost two basis points, sitting at 1.722%, weighing on the greenback, as shown by the US Dollar Index, plunging 0.60%, sitting at 95.06.

Meanwhile, the US 10 year Treasury Inflation Protected Securities (TIPS), used as a proxy for real yields, which means nominal yields minus inflation, recovers some ground after falling to -0.842%, up to -0.810%.

Inflation in the US overshoots the 7% threshold

Earlier in the North American session, the US economic docket revealed that the Consumer Price Index (CPI), an inflation gauge of the US economy, in December of 2021 in a year-over-year reading, increased 7%, higher than the 6.8% estimated. Furthermore, the Core CPI (YoY) that excludes volatile items like food and energy prices rose by 5.5%, two-tenths more than expected.

XAU/USD Price Forecast: Technical outlook

Gold’s daily chart depicts the yellow-metal as neutral-bullish biased, but downside risks remain. Fundamentally driven, the non-yielding metal is subject to rising nominal and real yields, which could be negative news for gold bulls. However, the softer tone of the USD keeps the yellow-metal bulls hopeful of higher prices ahead of the first-rate hike, which per money market futures, could happen in the FOMC March 2022 meeting.

To the upside, XAU/USD’s first resistance level would be September 3, 2021, a daily high at $1,834. Once that level is breached, the next stop would be November 16, 2021, cycle high at $1,877,18, followed by $1,900.

On the other hand, gold’s first support is $1,800. The breach of the latter would expose the 100-day moving average (DMA) at $1,793, followed by January 7 daily low at $1,782.60.