Gold Price Forecast: XAU/USD stands tall at two-month highs above $4,380

LONDON (August 13) Gold (XAU/USD) posts marginal losses on Thursday, after meeting resistance at the $4,450 area, yet with price action holding just above previous highs around $ 4,380 at the time of writing. The moderate US Consumer Price Index (CPI) figures seen on Wednesday have increased pressure on front-end US Treasury yields, and the US Dollar, underpinning demand for precious metals.

Economists at DBS Group Research note US CPI came in "very much in line with market expectations, not strong enough or weak enough to break the DXY Index out of its lower 99.4-100.1 range set after USD/JPY’s sell-off from the joint US-Japan interventions."

Against this backdrop, DBS highlights a marked reassessment of the Federal Reserve's (Fed) policy outlook, and cautions that "America’s weakened fiscal position erodes the yield advantage of US bonds supporting the USD," suggesting that fiscal concerns are increasingly weighing on the Dollar’s traditional rate and yield appeal.

Technical Analysis: Gold is correcting lower from oversold levels

The XAU/USD pair is performing a consolidative correction after reaching heavily overbought levels on intraday Relative Strength Index (RSI) studies. The 4-hour RSI has retreated to 58.81, still at levels consistent with solid bullish momentum, while the Moving Average Convergence Divergence (MACD) has drifted just below zero, hinting at waning upside pressure but not yet overturning the underlying bullish tone.

On the topside, initial resistance is seen at Wednesday's highs at the $4,450 area ahead of the late-May highs near $4,600. On the downside, a break below Tuesday and Wednesday's lows in the $4,360 area would expose deeper supports around $4,230 (August 6,7 lows) and the top of July's trading range, between $4,200 and $4,220.

FXStreet