Gold Price Forecast: XAU/USD eases below $1,804 hurdle as Fed hawks retreat on softer US inflation

• Gold price remains sidelined around one-month high, traders flirt with previous resistance.
• Fedspeak, US-China chatters join 61.8% Fibonacci retracement level to challenge XAU/USD bulls.
• Risk catalysts will be important, US PPI, Jobless Claims can entertain traders.

Gold price (XAU/USD) fades US inflation-led gains as the metal retreats to $1,790 during the initial Tokyo session on Thursday. The precious metal’s latest weakness could be linked to the mixed concerns surrounding the US Federal Reserve’s (Fed) next moves and the Sino-American tension.

On Wednesday, the US Consumer Price Index (CPI), declined to 8.5% on YoY in July versus 8.7% expected and 9.1% prior.  Following the US inflation release, US President Joe Biden said on Wednesday that they are seeing some signs that inflation may be moderating, as reported by Reuters. "We could face additional headwinds in the months ahead," Biden added. "We still have work to do but we're on track," adds US President Biden.

“After Wednesday's CPI report, traders of futures tied to the Fed's benchmark interest rate pared bets on a third straight 75-basis-point hike at its Sept. 20-21 policy meeting, and now see a half-point increase as the more likely option,” said Reuters following the data.

On the contrary, Minneapolis Fed President Neel Kashkari recently mentioned, “The Fed is ‘far, far away from declaring victory’ on inflation.” The policymaker also added that he hasn't "seen anything that changes" the need to raise the Fed's policy rate to 3.9% by year-end and to 4.4% by the end of 2023. Elsewhere, Chicago Fed President Charles Evans stated, “The economy is almost surely a little more fragile, but would take something adverse to trigger a recession.” Fed’s Evans also called inflation "unacceptably" high.

Additionally, Reuters relied on sources to mention that the saying US President Biden rethinks steps on China tariffs in wake of Taiwan response, which in turn challenged the XAU/USD bulls.

Against this backdrop, S&P 500 Futures print mild gains near 4,120 by the press time after Wall Street rallied and the US Treasury yields remained mostly unchanged the previous day.

Moving on, the weekly readings of the US Jobless Claims and the monthly Producer Price Index (PPI) for July could entertain the gold traders. However, major attention should be given to the qualitative factors in the wake of recent risk-negative headlines.

Technical analysis

Gold price remains pressured towards the previous resistance line from mid-June, after failing to cross the 61.8% Fibonacci retracement of the June-July downturn.

However, higher-low on the XAU/USD prices gain support from the same pattern of the RSI (14), which in turn portrays the bullish divergence and keeps the metal buyers hopeful.

It’s worth noting that, the commodity’s downside break of the resistance-turned-support, near $1,788, isn’t a call to the gold sellers as a three-week-old ascending support line and the 50-SMA, respectively near $1,783 and $1,777, could challenge the quote’s further weakness.

Alternatively, recovery moves need validation from the 61.8% Fibonacci retracement level surrounding $1,804.

Following that, a run-up towards the mid-June swing high near $1,858 can’t be ruled out.

Gold: Four-hour chart

Trend: Further upside expected