The gold price (XAU/USD) gained traction on Thursday amid the weaker US Dollar (USD). The recent Consumer Price Index (CPI) report showed that inflation in the US slowed in April, prompting market players to increase their bets on the US Federal Reserve (Fed) rate cuts this year.

A lower interest rate might benefit the yellow metal, as it means the borrowing cost of investing in gold decreases.

Economic Data Impact on Gold Prices

Gold traders will focus on US Building Permits, Housing Starts, the weekly Initial Jobless Claims, the Philly Fed Manufacturing Index, and Industrial Production on Thursday. The Fed’s Barr, Harker, Mester, and Bostic are also scheduled to speak on Thursday.

Nonetheless, the hawkish comments from the Fed’s officials might boost the US Dollar (USD) and cap the precious metal’s upside in the near term.

US CPI and Retail Sales Data

The US Consumer Price Index (CPI) increased by 3.4% YoY in April, compared to a rise of 3.5% in March, which is in line with market expectations. On a monthly basis, the headline CPI inflation dropped to 0.3% MoM in April from 0.4% in March, below the consensus of 0.4%.

The core CPI inflation, which excludes volatile items like food and energy, rose by 3.6% YoY in April, compared to the previous reading of 3.8%. The monthly core CPI eased to 0.3% MoM in April from 0.4% in March.

US Retail Sales came in at 0% MoM in April from a 0.6% rise in March, worse than the estimation of 0.4%.

Fed Rate Cut Expectations and Gold Demand

Fed Bank of Minneapolis President Neel Kashkari said on Wednesday that the central bank needs to watch the economy carefully to see if current policy rates are restrictive enough.

Financial markets are currently pricing in a nearly 75% chance of a rate cut by the Fed in September 2024, a rise from 65% before the US CPI report, according to the CME’s FedWatch Tool.

According to the World Gold Council’s Q1 2024 report, global gold demand climbed by 3% to 1,238 tonnes, marking the strongest first quarter since 2016.

Gold Price Forecast

Gold (XAU/USD) is trading at $2391.385, up 0.15%. The 4-hour chart shows key price levels, starting with a pivot point at $2378.05. Immediate resistance levels are at $2398.36, $2417.77, and $2444.06.

On the support side, key levels are at $2352.15, $2307.74, and $2277.84.Technical indicators provide a mixed outlook. The Relative Strength Index (RSI) is at 72, indicating overbought conditions, which could suggest a potential pullback.

The 50-day Exponential Moving Average (EMA) is at $2346.75, with the current price above this level, supporting a bullish trend. In conclusion, Gold’s outlook remains cautiously bullish above the pivot point at $2378.05.

However, a break below this level could shift the momentum towards a bearish trend. Conversely, breaking the immediate resistance at $2398.36 may boost bullish momentum.