XAU/USD gauges cushion around $1850 as DXY displays exhaustion, US Inflation eyed

  • Gold price is eyeing a cushion around $1,845.00 after a corrective move as DXY loses momentum.
  • The forecast of a stable US CPI is stating the Fed’s quantitative measures have failed to trim price pressures.
  • The precious metal is displaying back and forth moves in a broader range of $1,828.55-1,874.16.

Gold price (XAU/USD) is looking for a firmer cushion around $1,845.00 after a mild correction from $1,850.37. The precious metal displayed a responsive buying action after slipping to near $1,840.00. A responsive buying action generally takes place when the market participants find the asset a value bet.

On a broader note, the bright metal is trading lackluster, however, the release of the US inflation will bring a power-pack action in the counter. Investors are worried about the fact that the US Consumer Price Index (CPI) is not displaying any impact despite quantitative tightening measures by the Federal Reserve (Fed).

As per the market consensus, the annual US CPI is seen stable at 8.3%. The Fed has raised its interest rates by 0.75% in the last three months along with a quick balance sheet reduction program. One could state that the price pressures are so strong and demand extreme quantitative tightening measures for displaying a meaningful plunge.

Meanwhile, the US dollar index (DXY) has shown some signs of exhaustion after failing to surpass Thursday’s high at 103.37. A higher-than-expected inflation figure will strengthen the DXY bulls and will set them for a faster ride northwards.

Gold technical analysis

On a four-hour scale, the gold prices are showing a prolonged consolidation. The precious metal is displaying topsy-turvy moves in a $1,828.55-1,874.16 range. The 21-period Exponential Moving Average (EMA) at $1,849.70 is overlapping with the gold prices. Also, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals that the asset is awaiting a trigger for a decisive move.

Gold four-hour chart


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