XAU/USD

Gold price remains at the front foot on Wednesday as markets await US inflation report for March, to get more clues about the Fed’s next steps.

Bounce from $1981, low of a shallow pullback from new 2023 high at $2032, returned above $2000 level, improving near-term sentiment, although signals from daily chart are still mixed.

Immediate bias is expected to remain with bulls and keep focus at the upside, while the price action stays above $1995/$2000 (rising 10DMA/psychological).

Bullish scenario sees break of $2032 pivot as a trigger of fresh acceleration towards record highs at $2070/74.

Conversely, sustained break of lower pivot at $1978 (Fibo 23.6% of $1804/$2032/rising 20DMA) would weaken near-term structure and risk retest of key near-term supports at $1945 (late Mar/early Apr higher base/Fibo 38.2%), loss of which would signal reversal.

US inflation is expected to ease to 5.1% in March from 6.0% in February but underlying inflation (core CPI, stripped from volatile components and closely watched by the Fed) is forecasted at 5.6% in March, compared to 5.5% previous month.

Stubbornly high underlying inflation would signal that Fed needs to continue its fight with inflation by further tightening its monetary policy, though with more caution after recent banking stress, as well as concerns that further hikes would hurt economic growth.

Softer than expected US CPI numbers would lift gold, while March numbers above expectations would increase pressure on metal’s price.