Gold Price Forecast: XAU/USD eyes fresh record high on softer United States inflation, US Dollar

• Gold price remains firmer at 13-month high, braces for two-week uptrend.
• Easy United States inflation, Fed policy pivot talks weigh on US Dollar and propel XAU/USD.
• US Retail Sales, Michigan Consumer Sentiment Index and Consumer Inflation Expectations eyed for immediate Gold price directions.

Gold price (XAU/USD) remains fimer at the highest levels since March 2022 marked the previous day, making rounds to $2,040 amid early Friday in Asia. In doing so, the precious metals seek more clues to extend the latest run-up towards the record high of $2,075 reported in 2020.

Despite the latest inaction, the XAU/USD cheers softer US Dollar amid downbeat United States inflation clues and talks of the Federal Reserve (Fed) policy pivot, mainly backed by the latest data and events. Adding strength to the Gold price upside are the recession woes and upbeat headlines from China, one of the world’s biggest XAU/USD cosumers.

Gold price cheers easing inflation clues from the United States

Gold price cheer slower inflation data as it rules out the need for higher Federal Reserve (Fed) rates and weighs on the US Dollar in turn.

On Thursday, the US Producer Price Index (PPI) for March dropped to a four-month low of -0.5% MoM versus 0.0% expected and prior whereas the PPI YoY also declined to 2.7% from 4.9% previous readouts, versus market forecasts of 3.0%.

Previously, the Consumer Price Index (CPI), dropped to the lowest level since May 2021, to 5.0% YoY in March from 6.0% prior and versus 5.2% market forecasts. However, the annual Core CPI, namely the CPI ex Food & Energy, improved to 5.6% YoY during the said month while matching forecasts and surpassing 5.5% prior.

It should be noted that the Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting signaled that the expectations for rate hikes were scaled back due to the turmoil in the banking sector. With this, the Minutes offered no fresh information and raised doubts about the hawkish Fed moves, apart from May’s 0.25% rate hike.

On a different page, multiple statements from the International Monetary Fund (IMF) and the World Bank (WB) spring gathering of the global central bank officials suggest that the recession woes are more likely in the West. The same weighs on the US Dollar amid softer inflation data and propel the Gold price. Furthermore, hopes of economic recovery in Asia and the moves to destabilize the US Dollar’s reserve currency status by Russia, China and Brazil also exert downside pressure on the DXY and pleases the XAU/USD buyers.

Amid these plays, the US Dollar Index (DXY) remains depressed around the the lowest levels in 10 weeks the previous day amid a three-day downtrend, proding the year 2023 low and propel the Gold price. It’s worth observing that Thursday’s rebound in the US Treasury bond yields failed underpin the DXY’s corrective bounce. That said, US 10-year and two-year Treasury bond yields fade the previous day’s recovery moves while retreating to 3.45% and 3.96% in that order.

China catalysts add strength to the XAU/USD upside

Apart from the US Dollar weakness and recession woes in the West, hopes of faster economic recovery in India and China, one of the world’s biggest Gold consumers, also allow the XAU/USD to remain firmer. Recently, the IMF signalled that the India will be the global economic growth engine while the New Delhi and Beijing together could contribute 50% of the world economic growth. With this, Gold traders ignored the recently easy inflation numbers from China and India, as well as mixed trade figures for Beijing.

More clues of US inflation eyed for clear directions

Looking forward, the Gold price is likely to remin firmer amid a light calendar during the early part of the day. That said, US Retail Sales for March, expected to repeat -0.4% MoM figure, precedes the preliminary readings of the US Michigan Consumer Sentiment Index (CSI), likely staying unchanged at 62, to entertain the XAU/USD traders aferward. Also important to watch will be the University of Michigan’s (UoM) 5-year Consumer Inflation Expectations, prior 2.9%. Should the scheduled data print downbeat figures, the Gold price may quickly jump to the previous all-time high and may even surpass the $2,075 key hurdle.

Gold price technical analysis

Gold price remains firmer at a 13-month high, recently flirting with the 11-week-old ascending resistance line amid overbought conditions of the Relative Strength Index (RSI) line, placed at 14.

The same joins impressive bullish signals from the Moving Average Convergence and Divergence (MACD) indicator to suggest a pullback in the Gold price.

As a result, a convergence of a fortnight-long ascending trend line and the 10-DMA, around $2003 at the latest, can’t be ruled out.

However, a three-week-old rising support line and a horizontal area comprising February’s high, respectively near $1,966 and $1960-58, could challenge the Gold bears afterward.

Alternatively, a clear upside break of the stated resistance line, close to $2,042 at the latest, may not hesitate to approach the previous yearly high of around $2,070, a break of which will shift the market’s attention to the record top of $2,075 marked in 2020.

Should the Gold price remains firmer past $2,075, the expectations of witnessing a rally toward the $2,100 threshold gain momentum.

Gold price forecast: Daily chart

Trend: Further upside expected