Gold Price Forecast: XAU/USD drops below $ 1,670 as DXY recovers, US CPI/Fed minutes hog limelight

• Gold prices have slipped below $1,670.00 as the risk-off profile has rebounded firmly.
• Fed minutes will provide a detailed explanation of announcing a third consecutive 75 bps rate hike.
• A divergence in headline and core CPI may create troubles for the Fed.

Gold price (XAU/USD) has witnessed a vertical fall after failing to sustain above the critical hurdle of $1,680.00 in the late New York session. Selling pressure built in the S&P500 in the last hours of trade on Tuesday after an extended weekend indicates that the risk-off impulse has rebounded firmly ahead of the release of the Federal Reserve (Fed) monetary policy minutes on Wednesday.

Meanwhile, the US dollar index (DXY) has recovered the majority of its losses and is trading at around 113.30, at the time of writing. The DXY picked bids after dropping to near 112.50. Also, the 10-year US Treasury yields have rebounded and are aiming to recapture the 4% hurdle.

On Wednesday, the release of the Fed minutes will provide an elaborative explanation behind announcing the third 75 basis points (bps) interest rate hike.  The minutes will also provide viewpoints of all Fed policymakers toward interest rate targets to achieve price stability. Apart from that, the current situation of economic prospects will be of utmost importance.

Later this week, the US Consumer Price Index (CPI) data will be of utmost importance. The headline US inflation may trim to 8.1%, as per the expectations. While the core CPI that doesn’t consider oil and food prices may increase to 6.5%.

Gold technical analysis

On an hourly scale, the gold prices have slipped again below the 50% Fibonacci retracement placed at $1,672.61 after failing to sustain above the 50-period Exponential Moving Average (EMA) at $1,677.00. The 200-period EMA at $1,685.00 has tilted towards the south, which adds to the downside filters.

However, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates a consolidation for a while.

Gold hourly chart