XAU/USD baffles around $1,840 as DXY extends gains, US inflation in focus

  • Gold price has turned extremely volatile around $1,840.00 ahead of the US CPI.
  • The annual US CPI will remain stable above 8%.
  • The DXY is advancing higher amid expectations of a jumbo rate hike rising by the Fed.

Gold price (XAU/USD) is displaying topsy-turvy moves in the Asian session as the US dollar index (DXY) has extended its gains on Tuesday. A firmer Monday session by the DXY has carried-forwarded on Tuesday with a bullish open test-drive move. The precious metal has turned volatile as investors are sheltering themselves behind the DXY ahead of the US Consumer Price Index (CPI), which is due on Friday.

A forecast of an 8.2% annual inflation rate for May and consideration of former respective figures dictate that the price pressures are highly stable above 8%. Despite the rate hikes by the Federal Reserve (Fed) in March and May, the inflationary pressures have not impacted much and the US households seek more rate hikes to safeguard their real income.

The gold price is likely to remain on tenterhooks for a longer period as the US CPI will be followed by the interest rate decision by the Fed next week. Investors will keenly watch the inflation figures as a higher-than-expected inflation figure will compel the Fed to sound extremely hawkish and eventually will impact the bright metal.

Gold technical analysis

On a four-hour scale, XAU/USD is auctioning near the sloping trendline of the Ascending Triangle upward. The formation of the Ascending Triangle chart pattern denotes a rangebound movement in a confined area. The 200-period Exponential Moving Average (EMA) at $1,865.10 has acted as major resistance to the counter. Meanwhile, the Relative Strength Index (RSI) (14) has slipped into a bearish range of 20.00-40.00, which signals a continuation of the downside move by the precious metal further.

Gold four-hour chart

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