Gold Price Forecast: XAU/USD hits fresh multi-week top, seems poised to appreciate further

• Gold price climbs to a four-week high on Thursday and seems poised to appreciate further.
• The softer US CPI reaffirms expectations that the Fed will hike only one more time this year.
• The US Dollar languishes near a 15-month low and adds credence to the positive outlook.

Gold price trades with a positive bias through the Asian session on Thursday and is currently placed around the $1,960 area, or a nearly four-week high. The XAU/USD has now moved back above the 100-day Simple Moving Average (SMA) and the fundamental backdrop supports prospects for an extension of the recent rally from the $1,893 region, or a three-and-half-month low touched in June.

Bets that Fed will end its rate-hiking cycle benefit Gold price

The latest consumer inflation figures from the United States (US) released on Wednesday reaffirmed market expectations that the Federal Reserve (Fed) will hold interest rates after a 25 bps lift-off at the July 25-26 policy meeting. The US Bureau of Labor Statistics reported that the headline Consumer Price Index (CPI) rose 0.3% in June and the yearly rate edged lower to 3% from the 3.1% prior. Furthermore, the monthly rise in core prices was the smallest since August 2021. On an annual basis, the US core CPI decelerated to 4.8% - marking the smallest increase in more than two years. This comes on the back of signs that the US labor market is cooling and should allow the Fed to soften its hawkish stance, which, in turn, benefits the non-yielding Gold price.

Sliding US bone yields weigh on USD and also underpin XAU/USD

Market participants seem convinced that the US central bank is close to ending its fastest monetary policy tightening cycle since the 1980s. This leads to a further decline in the US Treasury bond yields and keeps the US Dollar (USD) depressed near its lowest level since April 2022. The prevailing bearish sentiment surrounding the Greenback is seen as another factor offering support to the US Dollar-denominated Gold price. Apart from this, Thursday's uptick could further be attributed to some technical buying following the overnight breakout through the 100-day SMA support breakpoint-turned-resistance. That said, the upbeat market mood might hold back bulls from placing aggressive bets around the safe-haven XAU/USD and cap further gains.

Traders now look to US macro data for fresh impetus

Market participants now look to the US economic docket, featuring the release of the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims data later during the early North American session. This, along with the US bond yields, will influence the USD price dynamics and provide some impetus to the Gold price. Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favour of bullish traders and suggests that the path of least resistance for the XAU/USD is to the upside. Hence, any intraday corrective decline might be seen as a buying opportunity and is more likely to remain limited, at least for the time being.

Gold price technical outlook

From a technical perspective, the stage seems all set for a move toward testing the next relevant hurdle near the $1,970-$1,972 supply zone. Some follow-through buying has the potential to lift the Gold price back towards the $2,000 psychological mark en route to the $2,010-$2,012 resistance. On the flip side, the 100-day SMA, currently around the $1,952 region, now seems to protect the immediate downside, below which the XAU/USD could slide to the $1,935 horizontal support. A convincing break below the latter might shift the bias in favour of bearish traders and pave the way for a slide towards the $1,925 support en route to the weekly low, around the $1,912 area, and the $1,900 mark.

Key levels to watch