Gold Price Prediction: The XAU/USD pair stabilizes around $1,850 as the DXY flounders ahead of steady US inflation

During the Asian session, the gold price (XAU/USD) is exhibiting choppy movement. The precious gold is fluctuating within a $2 range following a retreat from Tuesday's $1,855.64 high. This week's US inflation numbers will have a big influence on the Federal Reserve's (Fed) attitude to be taken the following week, hence causing considerable volatility in the foreign exchange market.

Fed chair Jerome Powell may implement an aggressive interest rate strategy in light of the optimistic US Nonfarm Payrolls report and annual inflation rate above 8 percent. Undoubtedly, rising pricing pressures are eroding household incomes in the United States, a situation that requires the Fed's sole attention. Fed Powell's declaration of a 50 basis point (bps) consecutive rate rise would be the ideal approach to continue the battle against inflation.

In the meantime, the US dollar index (DXY) is encountering obstacles at its important resistance level of 102.48. Tuesday's rise in positive market mood diminished the DXY's attractiveness and supported risk-perceived currencies. To go higher, the DXY must surpass Tuesday's high of 102.84.

Technical Analysis of Gold

XAU/USD is exhibiting an ascending triangle pattern on a four-hour time frame. The ascending trendline is drawn from the low of May 16 at $1,786.94, while the horizontal resistance is drawn from the high of May 24 at $1,866.89. At $1,850, the 21-period Exponential Moving Average (EMA) intersects with gold prices, indicating an impending consolidation. In the meanwhile, the Relative Strength Index (RSI) (14) oscillates between 40.00 and 60.00, indicating that forthcoming trading sessions will be volatile.