Gold Price Forecast: XAU/USD rebounds to near $1,865 as DXY weakens on risk-on impulse

• Gold price has surpassed $1,860.00 decisively as DXY jitters ahead of the US inflation.
• The precious metal has bounced sharply after hitting the previous week’s lows.
• A lower inflation forecast still favors a bumper interest rate hike by the Fed.

Gold Price bounced back sharply after hitting a low of $1,851.80 on Monday. The precious metal has become more precious as a rebound in the positive market sentiment has trimmed the US dollar index (DXY)’s safe-haven appeal.

Investors are eyeing the release of the US Consumer Price Index (CPI), which is due on Wednesday and it won’t be wrong to state that lower inflation forecasts have brought exhaustion in the DXY rally. Gold has been underpinned as the investors see US CPI at 8.1% lower than the former figure of 8.5%. A lower preliminary estimate is signaling that quantitative measures adopted by the Federal Reserve (Fed) to contain the soaring inflation are justifying the decision taken by Fed policymakers. Although the lower inflation print may not trim the chances of a bumper rate hike as the figure will remain mount higher than the targeted figure of 2%. However, gold prices may find a relief rally on expectations of an optimal inflation environment.

Gold technical analysis

On a four-hour scale, gold prices have bounced sharply after the successful re-test of their previous lows printed last week at $1,850.44. The precious metal is expected to find barricades at the 21-period Exponential Moving Average (EMA) at $1,871.17. The Relative Strength Index (RSI) (14) has moved above 40.00 after failing to sustain in a bearish range of 20.00-40.00.

Gold four-hour chart