Gold Price Forecast: XAU/USD on the back foot as sellers eye 200 DMA ahead of US CPI.

• The XAU/USD pair is down 0.39% and is heading towards the 200 day EMA as traders anxiously await the US inflation figures.
• Fed tone varies: While Harker hints at stable rates, Bowman advocates hikes to tame inflation, weighing on gold’s momentum.
• The 10-year US Treasury yield holds at 4%, while the DXY index falls slightly, without increasing appetite for gold.

Gold loses traction for the third straight day on the week and falls 0.39% below its opening price, as sellers test the 200-day EMA at $1,908.12. Traders, awaiting the release of US inflation data, are keeping the yellow metal depressed, which is trading in XAU/USD at $1,917.54.

Gold traders weigh US inflation projections and mixed signals from the Federal Reserve; All eyes are on the odds for a September rate hike

XAU/USD remains stable awaiting the release of the July inflation report, which is expected to show that the deflationary process is still intact. Estimates for the monthly and annual Consumer Price Index stand at 0.2% and 3%, respectively. Monthly data would remain unchanged from June, while year-on-year would show an improvement from 3.3%. Excluding volatile items, the so-called core CPI is expected to hold at 0.2%m/m, with estimated annual inflation of 4.8%, the same as in June.

However, XAU/USD buyers might hold out hope for higher prices as most Federal Reserve (Fed) officials have started to turn neutral or even dovish, as evidenced by the Fed Chairman’s statement. Philadelphia Fed Chairman Patrick Harker that rates could stay at current levels barring any deterioration in US economic data, he said on Tuesday. By contrast, Fed Governor Michelle Bowman declared that the Fed must keep on accelerating and raising rates to curb inflation.

Expectations for a September rate hike remained low, with a probability of 13.5%, CME’s FedWatch tool shows. Any sign from the Fed of rate cuts in 2024 could increase appetite for the non-yielding metal, which is suffering from high US Treasury yields.

The 10-year US Treasury yield falls two basis points to 4.00% but remains above the figure, a headwind for XAU/USD, while the US Dollar Index. US (DXY), a measure of the greenback’s performance against its peers, loses traction, edges at 102.436, down 0.10%.

XAU/USD Price Analysis: Technical Perspective

XAU/USD price is depressed after testing June lows around $1,893.12, extended gains towards July 20 swing high of $1,987.42, though buyers’ failure to break the latter exacerbated a pullback towards the current Gold price. On its way south, XAU/USD broke out of the 20, 50 and 100 day EMAs and is breaking below a trend line at time of writing support from five months ago that passes around $1,922/$1,930. A daily close would expose the 200 day EMA, followed by $1,900.

From an oscillator point of view, the Relative Strength Index (RSI) and Three-Day Rate of Change (RoC) suggest further declines are in store as sellers remain in command.