Gold Price Forecast: XAU/USD trades just above one-month low, eyes US CPI for fresh impetus

• Gold price edges higher during the Asian session on Thursday, albeit lacks follow-through.
• Bets for more rate hikes by the Federal Reserve underpin the US Dollar and cap the upside.
• China’s economic woes could lend support to the safe-haven XAU/USD and help limit losses.

Gold price attracts some buyers during the Asian session on Thursday and for now, seems to have snapped a three-day losing streak to a one-month low, around the $1,913 area touched the previous day. The XAU/USD, however, lacks follow-through or bullish conviction and currently trades around the $1,916-$1,917 region, up just over 0.10% for the day.

The intraday uptick, meanwhile, could be attributed to some repositioning trade ahead of the latest consumer inflation figures from the United States (US), due for release later today. The crucial Consumer Price Index (CPI) report will play a key role in influencing the Federal Reserve's (Fed) future rate hike path and help investors to determine the next leg of a directional move for the non-yielding Gold price. In the meantime, the prospects for further policy tightening by the US central bank could act as a headwind for the XAU/USD.

In fact, market participants now seem convinced that the US central bank will stick to its hawkish stance and keep interest rates higher for longer amid hopes of a soft landing for the resilient domestic economy. This, in turn, remains supportive of elevated US Treasury bond yields and continues to act as a tailwind for the US Dollar (USD). A stronger Greenback might also contribute to capping the US Dollar-denominated commodity and warrants some caution before confirming that the Gold price has already formed a near-term bottom.

Heading into the key data risk, worries about the worsening economic conditions in China, fueled by this week's weaker macro data, could lend support to the safe-haven precious metal. In fact, Chinese inflation figures released on Wednesday showed that the headline CPI turned negative for the first time since February 2021 and the Producer Price Index (PPI) fell for the 10th consecutive month in July. This comes on the back of rather disappointing trade data on Tuesday and suggested that the post-COVID economy recovery is losing steam.

Nevertheless, the aforementioned fundamental backdrop still seems tilted in favour of bearish traders and suggests that the path of least resistance for the Gold price is to the downside. Hence, any subsequent move up might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly.

Technical levels to watch