Gold Price Forecast: Trade The Range With XAU/USD Above $1,783

Gold prices closed at $1794.55 after setting a high of $1800.05 and a low of $1785.10. Gold prices were unresponsive on Tuesday as the US dollar is firm. At the same time, investors await readings on the US consumer price index from the Bureau of Labor Statistics. On Tuesday, the gold price forecast remains neutral in between a narrow trading range of 1,796 – 1,784 levels.

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The Bullish Dollar Weighs On Gold Prices

Investors had their eyes on this data as it could be crucial to the Fed’s decision on when to start reducing its supportive measures. The US Dollar Index reached 92.89, its highest since August 27th, during trading hours on Monday. However, the index could not remain there for long and started declining to reach 92.6. Thus, it added downward pressure on the greenback. 

The US Treasury yield on the 10-year note fell and reached 1.31%, which added further pressure on the US dollar. The weakness in the US dollar gave a push to gold prices, and it recovered some of its previous losses on Monday.

US Department Of The Treasury Reports The Federal Budget Balance 

On the data front, at 22:47 GMT, the Federal Budget Balance in August showed a deficit of -170.6B against the forecasted -260.5B. Thus, it weighed on the US dollar that added further gains in gold prices.

August’s CPI reading from the Bureau of Labor Statistics is at the forefront of this week’s market calendar. The economists are wondering whether the inflation spike will decrease this year as claimed by the Federal Reserve. The US CPI data is due on Tuesday and is expected to come in as 5.3%. In July, the CPI growth slowed but remained at a 13-year high of 5.4%.

The Federal Reserve’s Tapering Program Is In The Spotlight

The Federal Reserve is preparing for its September policy meeting, and its focus is largely on August’s CPI numbers to have clear ideas about reducing stimulus measures. The question of whether the Fed ought to taper its stimulus and raise interest rates has been debated for many months now. Although the economic recovery has picked up its pace, the resurgence of the Delta variant of the coronavirus has conflicted with the idea of tapering.

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