Gold Price Forecast XAU/USD – Stubborn US Inflation Data Adding to Rate-Hike Worries

Gold futures are edging lower on Wednesday after posting a steep sell-off the previous session in a volatile trade.

The weakness is being fueled by a sharp rise in Treasury yields on Tuesday and as the U.S. Dollar firmed after a report showing stubborn U.S. inflation added to concerns that the Federal Reserve would persist with monetary policy tightening.

At 04:46 GMT, April Comex gold futures are trading $1858.20, down $7.20 or -0.39% and the XAU/USD is trading $1847.72, down $7.29 or -0.39%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $172.58, up $0.10 or +0.06%.

Gold prices were also pressured by hawkish comments from Federal Reserve officials who said on Tuesday the U.S. central bank will need to keep gradually raising interest rates to beat inflation and suggested sticky price pressures driven by a hot jobs market may push borrowing costs higher than they once thought.

Following the CPI release on Tuesday and the hawkish Fed comments, traders of interest rate futures now see the Fed raising borrowing costs three more times, bringing the policy rate to 5.25%-5.50% range by July, if not June.

Daily April Comex Gold Technical Analysis

The main trend is down according to the daily swing chart. A trade through $1852.50 will signal a resumption of the downtrend. A move through $1902.30 will change the main trend to up.

The minor trend is also down. A trade through $1881.60 will change the minor trend to up. This will also shift momentum to the upside.

The long-term range is $2039.00 to $1647.70. The market is currently trading inside its retracement zone at $1843.40 to $1889.50.

The main range is $1749.60 to $1975.20. Its 50% level at $1862.40 is sitting inside the major retracement zone.

Daily April Comex Gold Technical Forecast

Trader reaction to the main range 50% level at $1862.40 is likely to determine the direction of the April Comex gold futures contract on Wednesday.

Bearish Scenario

A sustained move under $1862.40 will indicate the presence of sellers. This could lead to a quick test of the long-term 50% level at $1843.40.

Taking out $1843.40 could trigger an acceleration to the downside with the next major target coming in at $1749.60.

Bullish Scenario

A sustained move over $1862.40 will signal the presence of buyers. This could lead to a labored rally with upside targets a minor top at $1881.60, a Fibonacci level at $1889.50, a main top at $1902.30 and a 50% level at $1909.30.

The latter is a potential trigger point for an acceleration to the upside with the next major target coming in at $1975.20.