Gold Price Forecast: XAUUSD advances steadily around $1770 on a cool US PPI report

• Producer Price Index in the United States drops, supporting Federal Reserve’s case for diminishing interest-rate size increases.
• Russia’s – Ukraine conflict extends to Poland, spurring safe-haven flows toward Gold.
• US Treasury bond yields plunged on Fed policymakers, paving the path for slower rate hikes.
• XAUUSD prepares to assault the $1800 figure ahead of the 200-day EMA.

Gold Price is trading with solid gains on Tuesday after the release of a soft Producer Price Index(PPI) report in the United States, strengthening the Federal Reserve (Fed) case for tempering the pace of interest-rate increases. Another factor that propelled Gold Prices was geopolitical jitters linked to Russia’s invasion of Ukraine, which involved Poland and NATO. Therefore, the XAUUSD is trading at $1779 a troy ounce.

US Producer Price Index ratchet down, debilitate the US Dollar

The US Department of Labor (DoL) reported the US PPI for October decelerated compared to last month’s 8.2% and rose by 8% YoY, less than estimates of 8.3%. Excluding volatile items, the so-called core PPI advanced by 6.7% YoY, below the September 7.1%, and lower than the 7.2% uptick expected.

Given that Federal Reserve policymakers laid the ground to temper the tightening cycle after a positive Consumer Price Index (CPI) for October, Gold Prices are expected to rally. Traders should be aware that following the CPI release on Thursday, US Treasury bond yields plunged, with the 10-year benchmark note sliding 27 bps from 4.117% to 3.818%, a headwind for the US Dollar, which bolstered XAU.

Geopolitical tensions arose as Russia’s missiles landed in Poland

In the meantime, the Gold Price spiked late in the North American session on headlines: “Two Russian missiles landed on Poland, killing two Polish.” Even though there has not been a confirmation by Poland’s sources, the headline bolstered XAUUSD’s price from around $1767 to $1785, a troy ounce.

Delving into the latest newswires, a senior US intelligence official said that Russian missiles crossed into NATO member Poland, killing two people. After the incident, Polish Prime Minister Mateusz Morawiecki called an urgent meeting of a government committee for national security and defense affairs, according to a government spokesman, as reported by Reuters.

Federal Reserve policymakers committed to driving inflation down

Elsewhere, a slew of  Federal Reserve officials continued to express the need to keep raising rates, though welcoming October’s CPI and PPI reports, as Atlanta’s Fed President Raphael Bostic noted, “There are glimmers of hope,” in an essay posted in the Atlanta Fed Website. Bostic was echoing comments from the Fed Vice-Chair Lael Brainard, who said the central bank could slow the pace of rate hikes but emphasized the work is not done. In the same tone, Fed Governor Christopher Waller commented there’s a “ways to go” before interest-rate hikes are done.

That said, XAUUSD is set to extend its gains but faces solid resistance around January 28 daily-low-turned-resistance at $1780. Nevertheless, once cleared, the Gold Price would resume its uptrend toward the 200-day Exponential Moving Average (EMA) at $1803.

Gold Price Analysis: Technical outlook

Gold Price remains neutral-to-upward biased, set to test the psychological $1800 figure, immediately followed by the 200-day Exponential Moving Average (EMA). Nevertheless, XAUUSD needs to clear November’s 15 daily high at $1786 before reaching the $1800 mark. Once cleared, the 200-day EMA at $1803 is up for grabs. Of note, if Gold achieves a daily close above the latter, a June 23 high test at $1857 is on the cards.