Gold Price Forecast: XAU/USD senses selling pressure around $1,720, US Inflation hogs limelight

• Gold price has struggled around $1,720.00 as investors await US Inflation data.
• The headline CPI is expected to decline to 8.1% vs. 8.5% on an annual basis.
• A risk-on market mood has faded the DXY’s rally.

Gold price (XAU/USD) has witnessed barricades while attempting to cross the critical hurdle of $1,720.00 in the Asian session. The precious metal has displayed a weak pullback move after a firmer decline to near $1,711.65 and is expected to remain sideways as investors are expected to remain on the sidelines ahead of the US Consumer Price Index (CPI) data.

As gasoline prices have fallen dramatically in the US region and the soaring interest rates by the Federal Reserve (Fed) have squeezed liquidity, consensus for the US inflation is hinting at a decent decline ahead. The US inflation is expected to land at 8.1%, lower than the prior release of 8.5% on an annual basis. While the core CPI figure that doesn’t inculcate food and energy prices is seen higher by 10 basis points (bps) at 6%.

Meanwhile, the US dollar index (DXY) is displaying exhaustion signals after a dead cat bounce to near 108.90. A risk-on undertone in the market will keep the asset on the tenterhooks as a lower consensus for US CPI is hinting that the Fed will leave with no other choice than to scale down it hawkish tone.

Gold technical analysis

Gold price is trading in an Ascending Triangle pattern whose upward-sloping trendline is placed from Wednesday’s low at $1,694.31 while the horizontal resistance is August 31 high at $1,726.62. The 20-and 50-period Exponential Moving Averages (EMAs) are overlapping to each other, which indicates a sideways move ahead.

Also, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which supports a consolidation ahead.

Gold hourly chart