Gold Price Forecast: XAU/USD remains depressed around $2,020 ahead of US CPI

• Gold price edges lower on Wednesday and snaps a two-day winning streak.
• A modest US Dollar uptick is seen exerting some pressure on the XAU/USD.
• The downside seems limited as traders keenly await the crucial US CPI data.

Gold price struggles to capitalize on its gains recorded over the past two trading sessions and comes under some selling pressure on Wednesday. The XAU/USD remains depressed through the first half of the European session and is currently placed around the $2,030 region, just above the daily low touched in the last hour.

Modest US Dollar strength weighs on Gold price

The US Dollar (USD) edges higher for the third straight day amid the recent rise in the US Treasury bond yields, led by easing fears of a full-blown banking crisis in the United States (US). This, in turn, is seen as a key factor exerting some pressure on the US Dollar-denominated Gold price. That said, the uncertainty over the US debt limit, along with expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle, act as a headwind for the US bond yields.

Fed’s less hawkish outlook, US debt ceiling worries to limit losses

It is worth recalling that the Fed last week outlined a more stringent and data-driven approach to hiking rates further. Moreover, the markets have been pricing in the possibility of rate cuts later this year, which, in turn, is holding back the USD bulls from placing aggressive bets. Apart from this, worries about slowing economic growth and the US debt ceiling should help limit any meaningful downside for the traditional safe-haven Gold price, at least for the time being.

Traders now look to consumer inflation figures from United States

In fact, US President Joe Biden and House of Representatives Speaker Kevin McCarthy remained divided over raising the $31.4 trillion US debt limit following talks on Tuesday. The two, however, agreed to further talks aimed at breaking the deadlock. Traders also seem reluctant and might prefer to move to the sidelines ahead of the release of the latest US consumer inflation figures, due later during the early North American session, for a fresh directional impetus.

Any signs of a further easing of inflationary pressures will reaffirm expectations for a less hawkish Fed and prove negative for the Greenback. Nevertheless, the crucial Consumer Price Index (CPI) report should influence market expectations about the Fed's next policy move, which, in turn, will play a key role in driving the USD demand and help determine the near-term trajectory for Gold price. Nevertheless, the fundamental backdrop still seems tilted in favour of bullish traders.

Gold price technical outlook

From a technical perspective, any subsequent slide is likely to find some support near the $2,014 area, or the weekly low touched on Monday. This is closely followed by the $2,000 psychological mark, which if broken might prompt some technical selling. The Gold price might then turn vulnerable to accelerate the fall towards the $1,980 zone en route to the $1,970 strong horizontal support. Some follow-through selling will negate any near-term positive outlook and shift the bias in favour of bearish traders.

On the flip side, the $2,040-$2,050 region might continue to act as an immediate strong barrier. Some follow-through buying has the potential to lift Gold price back towards the all-time high, around the $2,078-$2,079 region touched last Thursday. The momentum could get extended further and allow bulls to conquer the $2,100 round-figure mark.

Key levels to watch