Gold Forecast: XAU/USD loses ground and falls to $1,870, awaiting US CPI.

• Gold traders are awaiting US CPI data for December, which weighs on prices for the yellow metal.
• The dollar rises, contrary to US Treasury yields, which fall.
• Gold Price Analysis: Could test $1,900 once breaks above $1,887; otherwise, you could test $1,860.

Gold price rally (XAU/USD) stalled around $1,887 after reaching a new eight-month high, though it erased some of those gains, turning negative on Wednesday amid upbeat sentiment in the markets. Were up Speculation that Thursday’s softer-than-expected US inflation report could prompt a pivot from the Fed. However, the dollar is recovering, which is a headwind for XAU/USD prices. At the time of writing these lines, XAU/USD is trading at $1,873.

Gold Price Drop Despite Risk Appetite and Falling Yields

The US stock markets continue to advance in the middle of the American session, portraying investor sentiment. XAU/USD pulls back as traders took profit ahead of December’s US inflation report. It is estimated that the monthly data of the Consumer Price Index (CPI) will fall to 0%, while the year-on-year data will fall from 7.1% to 6.5%.. Excluding volatile item inflation, the so-called core CPI is forecast to rise 0.3%m/m while the consensus for annual core inflation is 5.7%.

For its part, the DXY Dollar Index, which measures the value of the greenback against a basket of the six main currencies, has lost ground and stands at 103.371, with a slight rise of 0.09%. By contrast, US Treasury yields fell four basis points to 3,583%. Although US bond yields extended their losses, XAU/USD continues to fall.

On the side of US monetary policy, Trader expectations for a 25 basis point Fed rate hike stand at 77% probability, as shown by money market futures, while for a 50 basis point rise it is 23%. Money markets expect the Federal Funds Rate (FFR) to peak at around 4.92% in June 2023.

Gold Price Analysis: Technical Perspective

After peaking around $1,887, XAU/USD is almost flat. However, a daily close around the $1,876 area, Wednesday’s opening price, could compound a slide towards the current week’s lows of $1,865.40. However, oscillators such as the Relative Strength Index (RSI) and the Rate of Exchange (RoC) remain bullish and continue to support prices, although consolidation is expected around $1,875 before the data is released. US Fundamentals

XAU/USD will extend its gains towards $1,900 if it breaks $1,887. Elsewhere, a drop below $1,865.40 could pave the way towards the 20-day EMA at $1,830..