Gold Price Prediction: Plot Thickens Ahead of US CPI Data

Summary:
• Gold price continued consolidating after the Fed published its minutes and as traders waited for the upcoming inflation data.

Gold price continued consolidating after the Fed published its minutes and as traders waited for the upcoming inflation data. It was trading at $1,670, where it has been in the past few days. This price is about 3.55% below the highest point this month. So, what next for the XAU/USD price?

US inflation data ahead

The Federal Reserve published minutes of its last meeting on Wednesday. As was widely expected, these minutes showed that Fed officials were still concerned about the state of inflation. Therefore, they warned that they will continue hiking interest rates in the coming months. 

Some officials called for calibration of the policy. Therefore, analysts believe that the Federal Reserve will deliver a 0.75% rate hike in November and 0.50% in December. If this happens, the official cash rate will end the year at 4.25%, which will incentivise people to move to cash.

Gold price will next react to the upcoming American inflation data that comes on Thursday. Expectations are that the headline consumer price index (CPI) rose by 8.5% in September. Excluding the volatile food and energy prices, analysts believe that inflation rose by 6.5% during the month. 

Inflation is an important catalyst for gold prices because of how it impacts monetary policy and the US dollar. The higher-than-expected inflation rate will signal that the Fed will continue hiking rates in the coming months.

Gold price prediction

The three-hour chart shows that the XAU/USD price has been in a consolidation phase in the past few days. This consolidation started when gold dropped to $1,659, which was along the first support of the standard pivot point. The current price is also important since it was the lowest level on July 21. 

Gold seems to be forming a bearish flag pattern. Therefore, its price will likely continue falling as sellers target the next key support level at $1,625, which is along the second support of the standard pivot. A move above the resistance at $1,690 will invalidate the bearish view. The bearish view is in line with my recent gold price forecast.