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Gold Price Forecast: Rising US Consumer Prices to Keep Bullion Afloat

Gold Price Forecast: Rising US Consumer Prices to Keep Bullion Afloat

David Song, Strategist
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Gold Price Talking Points

The price of gold trades to a fresh weekly high ($1965) after showing a limited reaction to the better-than-expected US Non-Farm Payrolls (NFP) report, and the update to the Consumer Price Index (CPI) may keep the precious metal afloat as inflation is expected to pick up for the sixth consecutive month.

Fundamental Forecast for Gold Price: Bullish

The price of gold appears to be on track to test the February high ($1974) as the Russia-Ukraine war continues to rattle investor confidence, and the bullish momentum underlying the precious metal looks poised to persist as the recent advance pushes the Relative Strength Index (RSI) back into overbought territory.

Looking ahead, the US CPI may also influence the price of gold as the headline reading is expected to increase to 7.9% from 7.5% in February, which would mark the highest reading since 1982, and another uptick in consumer prices may generate a bullish reaction in bullion as market participants look to hedge against inflation.

In turn, the price of gold may continue to push higher ahead of the Federal Reserve interest rate decision on March 16 even as Chairman Jerome Powell prepares US lawmakers for an imminent shift in monetary policy, and the precious metal may continue to trade to fresh yearly highs after clearing the opening range for 2022 in February.

With that said, the deterioration in risk appetite may generate a test of the February high ($1974) as the Russia-Ukraine war appears to be spurring a flight to safety, and evidence of stronger inflation may push the price of gold towards the September 2020 high ($1993) as the US CPI is expected to increase for the sixth consecutive month.

Gold Forecast
Gold Forecast
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--- Written by David Song, Currency Strategist

Follow me on Twitter at @DavidJSong

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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