Gold Daily Forecast Gold (XAU/USD) continues advancing on Friday after erasing almost all of yesterday's gains, supported by rising Fed rate-hike expectations following the release of CPI data from the United States (US). US Treasuries are declining, and Oil prices are moving lower, helping the precious metal rebound. Currently, XAU/USD trades at $4,384, up 1.55% intraday after dropping near $4,300 in the previous session. The precious metal has slumped almost 2% on Thursday as rising oil prices fuel inflation concerns and push US Treasury yields to several-year highs. Currently, the benchmark 10-year US Treasury yield is trading around 4.91%, down from 4.97% intraday, its highest level since October 2023. Additionally, WTI Oil is fluctuating around $96 before dipping below the $100 mark for the first time this year. Even after the sharp decline, WTI looks ready to book another weekly gain. Yesterday's US CPI report came in close to estimates. As a result, the market reacted only modestly. The overall Consumer Price Index (CPI) increased by 0.4% MoM in August. The monthly growth rate accelerated slightly compared to 0.1% in July. Moreover, annual inflation remained unchanged at 3.4%, in line with expectations. Meanwhile, Core CPI, excluding volatile food and energy components, rose 0.3% higher MoM. This print exceeded estimates, which anticipated a 0.2% rise compared to the previous period. On an annualized basis, Core CPI decelerated marginally to 2.4% from 2.5%. This print met expectations. Notably, gasoline prices jumped 3.9% last month. The gasoline price increase contributed around 38.5% to overall CPI gains in August. However, the US Dollar briefly appreciated shortly after the CPI publication. However, it failed to sustain further gains. At the moment of writing, DXY indexes around 99, appreciating from its opening level of 99.07. Previously, DXY touched its intraday high of 99.36 soon after the publication. Indeed, today's data comes hot on the heels of yesterday's PPI numbers, which showed producer inflation rose annually to 5.4%, up from 4.8%. According to the CME FedWatch Tool, there is an 88% chance of a 25 basis point interest rate increase by the Federal Reserve at the September 15-16 policy meeting. In its recent update report, TD Securities noted that "gold managed to stay in touch above the higher end support despite the fresh energy uptick pressures in the market and higher chances for hikes by the Fed." TD Securities adds that "hawkish signals from a strong Fed along with hawkish signals could lead to limited selling activity ahead, postponing further upside moves." Looking into the long-term strategy, TD Securities believes that "fresh debasement themes of the US dollar, central banks' demand, and the rise in ETFs purchasing offers a strong supportive foundation." Therefore, the report suggests that despite recent weakness, the outlook for gold remains constructive in the coming months. On the daily chart, gold traded under higher volatility after the release of Core CPI m/m and CPI m/m data. The 0.4% Core CPI data came in positive for gold but negative for DXY. Thus, gold bulls stepped in, and prices rebounded sharply. The price tested the previous day's low of 4290 and rebounded sharply. Gold is currently trading at 4385 with strong bullish momentum. Indeed, XAU/USD maintains a mild bullish bias as it stays above the 100-day and 50-day Simple Moving Average (SMA). In fact, the recent pullback indicates a rebound in demand in the gold market. Nevertheless, the rise faces a cap below the 200-day SMA level of $4,538. The daily Relative Strength Index (RSI) rests near 49. Meanwhile, the ADX has eased to 20 levels on the daily timeframe. These figures suggest a consolidation period in XAU/USD rather than a strong directional bias. The daily MACD histogram remains above the 0 signal line, suggesting uptrend momentum is still present in yellow metal. From a bearish perspective, if bears regain control of yellow metal, initial support would emerge at 4282. If bears find a foothold below, it could trigger the H&S pattern and increase potential bearish pressure. Once bears find a foothold below 4282, it could pave the way toward the 100-day SMA, which could lead to a revisit of the 50-day SMA at $4,269. Furthermore, a breach of 4269 would lead to a bearish leg toward the August 6 low, near $4,220. Then comes the support zone at $4,150 and $4,000. Keep in mind, the H&S's measured target lies just below the year-to-date lows in the $3,940 area. On the upside, if the potential bullish bias remains intact and price jumps over the 4435 initial bar case. The most prominent barrier is at the 200-day SMA at $4538. Once price breaks above $4538, it will ease pressure from the bearish configuration and enable a test of highs near $4697, hit on August 25.
