Gold Price Forecast: XAU/USD Holds Key Support Near $4,300
Gold prices (XAU/USD) edged higher on Friday as the U.S. dollar’s recovery stalled ahead of the release of the U.S. Consumer Price Index (CPI) report. However, the precious metal struggled to reclaim the previous support zone around $4,350, leaving the key $4,300 support area vulnerable.
Gold’s recovery remains limited amid elevated oil prices, with Brent and West Texas Intermediate (WTI) crude trading at their highest levels since May. Rising energy prices are fueling global inflation concerns and could pressure central banks to maintain tighter monetary policies.
In the United States, Thursday’s Producer Price Index (PPI) report confirmed expectations of accelerating producer inflation. Annual PPI rose to 5.4% in August from 4.8% in July, while core PPI increased to 4.6% year-over-year from 4.3% previously.
Investors have increased their bets on a Federal Reserve rate hike next week, with attention now firmly focused on the U.S. CPI report. The inflation data will be closely watched for further confirmation of the Fed’s monetary policy outlook.
Technical Analysis: Gold Holds Above Bearish H&S Neckline
XAU/USD was trading around $4,344, maintaining a mildly bearish short-term bias as it remained above the neckline of a potential bearish Head-and-Shoulders (H&S) pattern.
Momentum indicators on the daily chart point to moderate bearish pressure that is gradually strengthening. The Relative Strength Index (RSI) has moved further below the key 50 level, while the Moving Average Convergence Divergence (MACD) indicator remains in negative territory.
Thursday’s recovery attempt struggled to break above the September 8 and 9 lows around $4,350. This resistance zone continues to limit the upside and keeps the focus on the more significant 200-day Simple Moving Average (SMA) near $4,538.
On the downside, a bearish break below the September trading low near $4,282 would activate the Head-and-Shoulders pattern and increase selling pressure toward the August 6 low around $4,220.
The measured target of the bearish H&S pattern lies slightly below the year-to-date low near $3,940, highlighting the potential for a deeper correction if the $4,282 support level is decisively breached.