Gold price (XAU/USD) continues its five-day losing streak on Wednesday as hot United States inflation data suggests the Federal Reserve (Fed) will hold back from cutting interest rates at its monetary policy meeting in May. The opportunity cost of holding non-yielding assets, such as Gold, has risen as the Fed is expected to keep interest rates at their current level for a longer period.
The absence of evidence ensuring the return of the underlying inflation to the 2% target has strengthened the need to maintain a hawkish narrative on interest rates. Fed policymakers are not expected to bring down critical rates until they see price pressures easing for a decent period. The US Consumer Price Index (CPI) grew faster than market expectations due to an uptick in rental and healthcare costs. Contrary to market action, US Treasury Secretary Janet Yellen said on Tuesday there is progress in the war against persistent inflation despite surging rental prices.
Gold price prints a fresh two-month low below $1,990. The precious metal witnesses an intense sell-off after surrendering the psychological support of $2,000. The Yellow Metal is expected to face more downside as a breakdown of the Symmetrical Triangle chart pattern seems confirmed due to wider bearish tick formation on Tuesday. The short-term appeal has turned bearish as the 20 and 50-day Exponential Moving Averages (EMAs) have turned down. The Gold price is expected to find support near the 200-day EMA, which trades around $1,970. The 14-period Relative Strength Index (RSI) has slipped below 40.00 for the first time in more than four months. More downside looks likely amid an absence of oversold and divergence signals.