Gold Price Forecast: Will US inflation trigger a sustained move above $1,834 in XAU/USD?


  • Gold price off highs but its bullish potential remains intact.
  • US inflation eyed for hints on the timing of the Fed rate hike.
  • Gold price needs a daily close above $1,834 to extend the technical breakout.

The buying interest around gold price remained unabated on Tuesday, as the bright metal refreshed two-month highs at $1,833, falling a thread-line short of the September highs of $1,834. Gold price extended its bullish momentum into a fourth straight day, as the US dollar continued its corrective downside, tracking the persistent weakness in the Treasury yields across the curve. Investors weighed in the global central bankers’ reluctance to signal a rate hike amid growing inflation worries, which underpinned the underlying bullish tone in gold price. Additionally, the passage of the US $1 trillion infrastructure bill provided the much-need tailwind to gold’s upsurge. Gold jumped nearly 2% last Friday on the Fed’s and the Bank of England’s (BOE) dovish stance.

Gold price is retreating in the lead-up to the US inflation showdown, which is eagerly awaited by the markets for any hints on the Fed’s rate hike timing, as well as, its pace of tapering in the coming months. The metal is easing from two-month tops, as the US dollar has caught a fresh bid amid escalating inflation concerns, especially after the Chinese Consumer Price Index (CPI) and Producer Price Index (PPI) jumped amid power crunch. Record high Chinese PPI intensified the risk-off mood, lifting the safe-haven demand for the greenback. All eyes now remain on the US inflation figures for the next decisive move in gold price. The US CPI is expected to arrive at 5.3% YoY in October vs. 5.4% previous while the core figure is seen steady at 4% in the reported period.

Gold Price Chart - Technical outlook

 

Gold: Daily chart

Gold price has turned south after running into strong offers on a couple of occasions just below the September highs.

The latest leg lower can be associated with the downtick in the 14-day Relative Strength Index (RSI). With the leading indicator, however, still holding comfortably above the 50.00 level, gold’s bullish potential remains well in place.

Adding credence to the bullish bias, a bull cross, represented by the 21-Daily Moving Average (DMA) having pierced the 200-DMA from below, remains in play.  

Gold bulls need a daily closing above the $1,834 barrier to unleash the further upside. The next stop for gold buyers is seen at the $1,840 round number, above which the June 16 high of $1,853 could likely be tested.

Should the bears manage to defend the September tops, the further retracement towards Tuesday’s low of $1819 could be in the offing.

Further south, symmetrical triangle resistance-turned-support at $1,806 will emerge as a powerful support.

Note that gold price yielded an upside breakout from the symmetrical triangle formation last Friday.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD treads water just above 1.0400 post-US data

EUR/USD treads water just above 1.0400 post-US data

Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.

EUR/USD News
GBP/USD remains depressed near 1.2520 on stronger Dollar

GBP/USD remains depressed near 1.2520 on stronger Dollar

Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.

GBP/USD News
Gold keeps the bid bias unchanged near $2,700

Gold keeps the bid bias unchanged near $2,700

Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.

Gold News
Geopolitics back on the radar

Geopolitics back on the radar

Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.

Read more
Eurozone PMI sounds the alarm about growth once more

Eurozone PMI sounds the alarm about growth once more

The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures