Gold Price Forecast: XAUUSD shifts into a rangebound structure below $1,680 ahead of US Inflation data

• Gold price is oscillating in a $1,673.96-1,681.95 range ahead of US mid-term elections.
• Overall positive sentiment is continuously providing support to the gold bulls.
• The returns on US government bonds are still solid despite rising odds of a slowdown in Fed’s rate hike pace.

Gold price (XAUUSD) is declining gradually after multiple attempts of breaking above the critical hurdle of $1,680.00. Overall positive sentiment is providing support to the gold prices while anxiety ahead of the US Consumer Price Index (CPI) data has capped the upside.

The precious metal has remained in a narrow range of $1,673.96-1,681.95 on Monday despite back-to-back bearish trading sessions in the US dollar index (DXY)’s counter. The DXY dropped to near the psychological support of 110.00 as the market participants believe that a slowdown in the pace of rate hikes by the Federal Reserve (Fed) is certain.

S&P500 advanced by more than 1% as a gradual incline in critical rates won’t impact corporate earnings to a greater extent. While, the 10-year US Treasury yields have not been impacted and are scaling higher, recorded at 4.22% at the time of writing.

On Tuesday, the major trigger for the assets will be developments on US mid-term elections with voting for all 435 seats in Congress and 35 of the 100 seats in the Senate. As strategists at ANZ Bank note, the US Dollar and equity markets tend to finish the month higher after midterms.

Gold technical analysis

On an hourly scale, the gold prices are forming a Bullish Flag chart pattern that signals a continuation of the upside move after the breakout of the consolidation. The 20-period Exponential Moving Average (EMA) at $1,674.87 has acted as major support for the counter.

Meanwhile, the Relative Strength Index (RSI) (14) has slipped into the 40.00-60.00 range but that doesn’t warrant a reversal in the trend.

Gold hourly chart