Gold Price Forecast: XAU/USD rallies after US CPI and Fed expectations

• The price of gold has recovered thanks to the US CPI.
• The Federal Reserve’s expectations have barely changed, which has boosted the offers in the price of gold.

The price of gold it is unsettled as markets digest the release of US inflation data. The US Consumer Price Index has come out in line with expectations for the 0.4% MoM vs. 0.4% expected. For its part, the annual CPI for January stood at +6.4%, compared to the +6.2% expected.

The Fed swaps indicate that the 2023 anticipated funds rates will not change much as a result and that has seen some softness in the US dollar which is helping lift the price of gold. At the time of writing, Gold price is trading in the middle of the day’s range at $1,860.

Little change in Fed expectations

The market is likely to lower its interest rate expectations following this data, which is allowing the price of Gold to rise, as although Bullion is considered an inflation hedge, it is highly sensitive to rising rates. of interest in the US, since they increase the opportunity cost of holding the zero-yielding asset.

Before the data was released, markets had expected the Fed’s target rate to peak at 5.188% in July, from the current range of 4.5% to 4.75%. Fed funds futures now envision a 5.5-5.25% top Fed funds rate for July, versus nearly equal previous odds for a higher Fed funds rate.

Gold Technical Analysis

Gold price has rallied and is heading towards a stronger test of resistance after a series of short days in the market, with our eyes set again on a move into the ascending channel near $1,880.