Gold Price Forecast: XAU/USD corrects before taking on lifetime highs

• 
  Gold
  price
  pulls
  back
  to
  $2,400
  early
  Friday,
  having
  hit
  fresh
  two-month
  highs
  at
  $2,425
  on
  Thursday.
• 
  The
  US
  Dollar
  rebounds
  with
  Treasury
  bond
  yields
  after
  softer
  US
  CPI
  data
  spiked
  September
  Fed
  rate
  cut
  bets.
• 
  The
  USD/JPY
  recovery
  post-FX
  intervention
  also
  supports
  the
  Greenback.
• 
  Gold
  price
  remains
  a
  ‘buy-the-dips’
  trade
  amid
  the
  bullish
  technical
  setup
  on
  the
  daily
  chart.

Gold
price
is
reversing
to
test
the
$2,400
threshold
early
Friday,
staging
a
minor
pullback
from
a
new
two-month
top
set
at
$2,425
on
Thursday.
Traders
now
look
forward
to
the
US
Producer
Price
Index
(PPI)
data
and
looming
risks
of
more
Japanese

forex
(FX)
market
intervention
for
the
next
push
higher
in
Gold
price.

Gold
price
consolidates
weekly
gains

Gold
price
is
on
track
to
witness
a
third
consecutive
week
of
gains,
sitting
at
its
highest
level
since
May.
Despite
the
latest
pullback
Gold
price
remains
exposed
to
upside
risks,
as
a
September
interest
rate
cut
by
the
US

Federal
Reserve
(Fed)
is
almost
a
done
deal
after
the
softer-than-expected
June
US
Consumer
Price
Index
(CPI)
data
released
on
Thursday.

The
US
CPI
climbed
3.0%
YoY
in
June,
slowing
from
a
3.3%
increase
in
May
and
below
the
3.1%
expected
print.
Meanwhile,
the
annual
core
CPI
inflation
dipped
to
3.3%
in
the
same
period,
against
the
market
consensus
of
3.4%.
On
a
monthly
basis,
CPI
fell
0.1%
while
core
CPI
rose
0.1%.
Both
readings
fell
short
of
expectations.

Bets
for
a
September
Fed
rate
cut
spiked
to
above
90%
following
the
dismal
US
inflation
data,
according
to
the
CME
Group’s
FedWatch
Tool,
compared
to
a
74%
chance
seen
pre-CPI
release.
The
US
Dollar
was
slammed
alongside
the
US
Treasury
bond
yields,
in
the
aftermath
of
the
US
inflation
data,
with
the
pain
exacerbated
by
the

USD/JPY
sell-off.

The
Japanese
Yen
rallied
hard,
as
the
US
CPI
gloom
was
joined
by
Japan’s

forex
market
intervention,
smashing
USD/JPY
over
300
pips
in
a
matter
of
an
hour.
Against
this
backdrop,
Gold
price
stormed
through
the
$2,400
barrier
to
hit
the
highest
level
in
two
months.
 

In
the
day
ahead,
Gold
price
could
see
an
extension
of
the
corrective
downside
if
the
US
Dollar
recovery
gathers
traction.
However,
traders
will
likely
remain
wary
ahead
of
the
US
PPI
inflation
report
and
the
preliminary
Michigan
Consumer
Sentiment
and
Inflation
Expectations,
which
could
reinforce
fresh
selling
around
the
US
Dollar.
This,
in
turn,
could
trigger
a
fresh
leg
higher
in
Gold
price.
The
end-of-the-week
flows
could
also
play
a
pivot
role
in
the
Gold
price
action.

Gold
price
technical
analysis:
Daily
chart

The
short-term
technical

outlook
for
Gold
price
continues
to
suggest
a
retest
of
the
all-time
highs
at
$2,450,
as
the
14-day
Relative
Strength
Index
(RSI)
holds
its
position
well
above
the
50
level.

Adding
credence
to
the
bullish
potential,
the
21-day
Simple
Moving
Average
(SMA)
is
on
the
verge
of
crossing
the
50-day
SMA
from
above,
which
if
realized
on
a
daily
closing
basis
will
confirm
a
Bear
Cross
and
revive
the
Gold
price
upside.

Gold
buyers
need
to
yield
a
decisive
break
above
the
two-month
high
of
$2,425
to
retake
the
record
highs
of
$2,450.

On
the
downside,
if
the
pullback
gains
momentum,
Gold
price
could
face
immediate
support
at
the
previous
week’s
high
near
$2,390.

The
next
bearish
target
is
seen
at
the
previous
day’s
low
of
$2,371,
below
which
the
$2,350
psychological
level
will
come
into
play.

All
in
all,
Gold
price
remains
a
good
buying
opportunity
on
every
pullback.