Gold Price Forecast: XAU/USD challenge strong resistance at $1834 pre-US CPI

• Gold braces the July 2021 swing highs around $1,834 as the market prepares for US inflation.
• US Treasuries slide led by the 10-year benchmark note down at 1.923%.
• XAU/USD Technical Outlook: Neutral, unless it breaks above $1,834, which would shift the bias to neutral-bullish.

Gold (XAU/USD) rallies in the New York session taking advantage of a catalyst, alongside falling US Treasury yields, ahead of the US inflation report. At press time, XAU/USD is trading at $1834.61, advancing close to 0.50%.

Financial markets sentiment is upbeat, as reflected by equity markets. The global bond sell-off stopped as the US Department of Labour would reveal January’s inflation report on Thursday, widely expected by market players. That said, on Wednesday, US Treasuries yields are dropping led by the 10-year benchmark note down three basis points, sitting at 1.923%

Fed’s Mester expects a hike in March meeting

In the meantime, a light US economic docket left XAU/USD traders waiting for Fed speaking and market sentiment. Earlier, Cleveland’s Fed President Loretta Mester (voter 2022) said that she “expects inflation will moderate but would remain above 2% this year and next.” Worth noting that Mester supports a rate increase in March, followed by future rate hikes, which the economy will guide.

That said, market players prepare ahead of the US Consumer Price Index for January, to be released on Thursday. Estimations for the headline CPI lie at 7.3%, while Core CPI is foreseen at 5.9%.

Worth mentioning that analysts at TD securities expect inflation to “slow significantly in 2022, and fiscal stimulus fades and supply constraints ease, but for now, the data remain strong.” TD analysts’ estimates for January’s inflation are headline CPI at 7.2%, while core CPI at 5.8%. In the meantime, for the remainder of the year, TD analysts expect headline CPI to recede to 2.9% y/y in Q4 of 2022 while excluding volatile items, also called core CPI, at 3.0% y/y in Q4 of 2022.

XAU/USD Price Forecast: Technical outlook

On Wednesday, XAU/USD broke the central line of Pitchfork’s channel at $1,830, exposing July 2021 swing high at $1,834. Nevertheless, that price level has been unsuccessfully tested four times, though, by the end of November 2021, it was broken when XAU/USD reached $1,877 before retracing its gains towards $1753.

XAU/USD first resistance would be $1,834. A daily close above would expose the January 25 high at $1,853, followed by a nine-month-old downslope trendline around  $1,860.

On the flip side, XAU/USD’s first support would be Pitchfork’s central line, around $1,820. Breach of the latter would expose the confluence of the 50 and 200-DMA around $1,806, followed by the 100-DMA at $1,798.