Gold Price Forecast: XAU/USD confirms bearish wedge ahead of United States inflation data


  • Gold price fails to find acceptance above 200-Daily Moving Average.   
  • Gold bulls come up for air ahead of the United States inflation data.
  • The US Dollar pauses recovery despite a cautious market mood.
  • Where is the Gold price headed next after a rising wedge breakdown?

Gold price is attempting a minor comeback while within a familiar range below the $1,800 mark on Tuesday as investors look to take profits on the latest US Dollar (USD) upsurge ahead of the all-important United States Consumer Price Index (CPI) data.

US Consumer Price Index could impact Federal Reserve’s outcome

The United States Dollar is reversing the previous turnaround so far in this Tuesday’s trading as markets reposition themselves, gearing up for the most important event of this week – the US Consumer Price Index slated for release at 13:30 GMT. Economists expect the headline Consumer Price Index to soften to 7.3% YoY and 0.3% MoM in November. Meanwhile, the Core figures are seen easing to 6.1% and 0.3% on an annualized and monthly basis. Any upside surprise in the Core CPI data could prompt the Federal Reserve policymakers to revise higher their forecasts for the terminal rate, eventually impacting the US central bank’s Dot Plot chart, which will be announced on Wednesday. The US Federal Reserve is widely expected to hike the key rates by 50 basis points (bps), slowing down its rate hike track amid growing recession fears.

Should the US Core Consumer Price Index beat estimates, it could trigger a US Dollar rally alongside the US Treasury bond yields, weighing negatively on the non-interest-bearing Gold price. The critical United States data is likely to impact the Gold price action significantly.

“It’s worth noting that even if the US Dollar comes under renewed selling pressure on a weak CPI print, the Euro and Pound Sterling could struggle to capture the capital outflows amid uncertainties surrounding the European Central Bank (ECB) and the Bank of England’s (BoE) policy decisions, which will be announced on Thursday. In that scenario, the Gold price could be the main beneficiary due to its inverse correlation with the benchmark 10-year US Treasury bond yield,” FXStreet’s Senior Analyst Eren Sengezer explained.

Goldman Sachs’ upbeat outlook helps Gold price rebound

Gold price also finds some fresh buying impetus from the latest research note published by Goldman Sachs, which offered an upbeat outlook going forward. The United States banking giant said that “gold, with its real demand drivers, to outperform the highly volatile bitcoin in the long term.”

Among other news concerning Gold price, Reuters reported that “seizures of smuggled gold in India reached a three-year high this year after the government raised the import duty on the precious metal and international flights resumed following COVID-19 curbs.” The seizure could pressure the global Gold supplies, boding well for Gold bulls.

Gold price technical analysis: Daily chart

Gold price yielded a rising wedge breakdown after closing Monday below the rising trendline support at $1,782.

The downside break opens floors to test the mildly bullish 21-Daily Moving Average (DMA) at $1,768.

Further south, the $1,750 psychological level could be on Gold sellers’ radars. Softer-than-expected US Consumer Price Index data is critical to extending the bearish breakdown.

The 14-day Relative Strength Index (RSI) is trading listlessly, still comfortably above the midline, suggesting that Gold price remains a ‘buy the dips’ trade.

On the upside, the immediate resistance is seen at the 200DMA at $1,790, above which the $1,800 mark will be a tough nut to crack for Gold bulls.

Upbeat US inflation data could offer Gold price acceptance above the latter, calling for a test of the multi-month high at $1,810.

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

Pound Sterling edges higher after BoE rate cut, focus shifts to Governor Bailey – LIVE

Pound Sterling edges higher after BoE rate cut, focus shifts to Governor Bailey – LIVE

The Bank of England (BoE) lowered the policy rate by 25 basis points to 4.75% following the November meeting, as expected, and said that the budget is forecast to boost inflation. BoE Governor Bailey will speak on the policy outlook in a press conference next.

FOLLOW US LIVE
EUR/USD clings to gains above 1.0750 amid US Dollar pullback

EUR/USD clings to gains above 1.0750 amid US Dollar pullback

EUR/USD holds higher ground and trades above 1.0750 on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trump win-inspired USD longs ahead of the Federal Reserve's highly-anticipated policy announcements.

EUR/USD News
Gold recovers above $2,660, awaits Fed rate decision

Gold recovers above $2,660, awaits Fed rate decision

Gold recovers slightly following Wednesday's sharp decline and trades above $2,660. The benchmark 10-year US Treasury bond yield struggles to push higher after Trump-inspired upsurge, allowing XAU/USD to hold its ground ahead of the Fed policy decisions.

Gold News
Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

Federal Reserve expected to deliver 25 bps interest-rate cut, shrugging off Trump victory

The Federal Reserve is widely expected to lower the policy rate after Donald Trump won the US presidential election. Fed Chairman Powell’s remarks could provide important clues about the rate outlook.

Read more
Outlook for the markets under Trump 2.0

Outlook for the markets under Trump 2.0

On November 5, the United States held presidential elections. Republican and former president Donald Trump won the elections surprisingly clearly. The Electoral College, which in fact elects the president, will meet on December 17, while the inauguration is scheduled for January 20, 2025.

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