Gold Price Forecast: XAUUSD rebounds from 10-week low ahead of Feds preferred inflation gauge

Gold Price is facing barricades near the $1,890.21-1,895.15 range and 20-EMA.

The DXY is driving higher on an adrenaline rush from uncertainty over the rate decision by the Fed.

Apart from the interest rate decision, balance sheet reduction and further guidance will be in focus.

The metals latest run-up could be linked to the pullback in the US Dollar Index (DXY) after it rose to the fresh high in 20 years. That said, the DXY drops 0.12% intraday to 103.55 by the press time.

Even so, Gold Price remains pressured as the ongoing Russia-Ukraine crisis and China‘s covid woes join the Fed’s hawkish bias to underpin the US dollars safe-haven demand. Recently favoring the greenback was the US Gross Domestic Product (GDP) data as traders concentrated more on the upbeat details than the negative headline figures.

Given the off in Japan, inactive bond yields seemed to have triggered the DXYs pullback. On the same line is the cautious mood ahead of the Fed's preferred inflation gauge, namely the US Core Personal Consumption Expenditures Price Index. Forecasts suggest the US Core PCE inflation data ease to 5.3% YoY versus 5.4% prior, which in turn may add to the pullback moves of the US dollar if easing more than expected.

In addition to the US PCE Price Index, US Michigan Consumer Sentiment Index and Chicago PMI will join the risk catalysts to direct short-term Gold Price moves.

Also read: XAU/USD outlook: Bears crack pivotal supports at $1900 zone as dollar rises further

Gold Price (XAU/USD) has rebounded sharply after hitting a low of $1,872.22 on Thursday. The rebound in the gold prices looks very confident, which claims the availability of responsive buyers who found the precious metal a value bet near the $1,870s area and paddle the bright metal prices to the upside. However, the precious metal is still inside the woods as it has not established above the psychological resistance of $1,900 yet and may get considered as a pullback, not a reversal as fundamentals are still unfavorable.

Meanwhile, the US dollar index (DXY) is witnessing a minor pause after hitting a high of 103.93 in the Asian session but the overall structure is still promising. The DXY has delivered a six-day winning streak and is likely to advance further despite weak US economic data. The annualized Gross Domestic Product (GDP) numbers have delivered a poor performance after printing at -1.4% against the forecasts of 1.1% and the prior print of 6.8%. Also, the Core Personal Consumption Expenditure (PCE) has landed at 5.2% in mid the expectations and the previous figure of 5.4% and 5% respectively.

Also read: Gold Price Forecast: XAUUSD to enjoy robust investment demand this year – Commerzbank

Well, the real catalyst which is driving the DXY and barricading the gold prices in a broader context is the interest rate decision by the Federal Reserve (Fed), which will be announced next week. An interest rate elevation by 50 basis points (bps) is expected to be announced by Fed chair Jerome Powell as signaled in his testimony at the International Monetary Fund (IMF) meeting. It would be interesting to see the dictation from Fed policymakers on the balance sheet reduction as liquidity contraction from the economy is the real agenda. Also, the roadmap dictating reversion to neutral rates will be keenly watched by the market participants.

In todays session, investors will eye on the release of the Michigan Consumer Sentiment Index (CSI), which is likely to land at 62 against the prior print of 65.7.

Gold technical analysis

Gold Price extends rebound from the 100-DMA level, surroudning $1,877 by the press time. The recovery moves, however, need validation from the early month's swing low near $1,915.

On a four-hour scale, XAUUSD is bid around the supply zone placed in a narrow range of $1,890.21-1,895.15. The asset is facing barricades near the 20-period Exponential Moving Average (EMA) at $1,898.10. While the downward trending 50-EMA at $1,917.90 is still advocating bears. The Relative Strength Index (RSI) (14) is attempting a range shift from 20.00-40.00 to 40.00-60.00, which could signal a short-lived reversal.

Gold four-hour chart