Gold Price Forecast: XAUUSD retreats from $1,700 as DXY turns subdued, US Inflation a key event ahead

• Gold price has rebounded from $1,702.00 as yields are continuously facing downside pressure.
• Rising anticipation for a slowdown in Fed’s policy tightening measures has kept US yields on tenterhooks.
• A slowdown in consumer spending and gasoline prices may trim the US inflation figures.

Gold price (XAUUSD) has witnessed fresh demand from around $1,702.00 in the Tokyo session as the US dollar index (DXY) is displaying a subdued performance. The DXY is striving for a break above the intraday hurdle of 110.40. The precious metal has picked bids as the risk profile has turned mildly positive amid a sheer decline in the returns from US government bonds.

Rising anticipation for a slowdown in policy tightening measures by the Federal Reserve (Fed) has dragged the 10-year US Treasury yields below 4.09%. S&P500 futures have attempted recovery in Tokyo after a sell-off on Wednesday. Volatility ahead of the US mid-term elections outcome, and the announcement of a mass lay-off of employees at Facebook now punished the US 500-stock basket.

Now, investors are keeping an eye on the US inflation data-the show-stopper event. A decline in consumer spending in the third quarter of CY2022 and a significant fall in gasoline prices are pointing to a downside in the inflation figures. The headline inflation could trim to 8.0% while the core Consumer Price Index (CPI) could drop a little lower by 10 bps to 6.5%.

Gold technical analysis

On an hourly scale, the gold price is oscillating in a range of $1,702.10-1,722.40 after a sheer upside move. The precious metal is still holding the 50-period Exponential Moving Average (EMA) at $1,698.40, which signals that the upside is intact.

The Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 after remaining in the bullish range, which indicates that the upside momentum has exhausted but that doesn’t warrant a bearish reversal.

Gold hourly chart