XAU/USD Current price: $3,643.25

• United States inflation, as measured by the CPI, rose to 2.9% YoY in August.
• The Federal Reserve is expected to cut interest rates three times before year-end.
• XAU/USD extends its consolidative phase near record highs ahead of a fresh catalyst.

Gold price held within familiar levels on Thursday, hovering around $3,630 in the mid-American session. The XAU/USD pair suffered a minor intraday setback ahead of first-tier events, which were unable to spur action around the bright metal.

On the one hand, the European Central Bank (ECB) announced its decision to keep benchmark interest rates unchanged following the September meeting. The decision was largely anticipated by market players and had no major impact on financial markets, although the Euro (EUR) shed some ground amid fresh projections on slower growth in the Eurozone.

On the other hand, the United States (US) released the August Consumer Price Index (CPI), which showed inflation remained sticky in the month. The figures were pretty much in line with the market’s expectations, with the annual CPI hitting 2.9% and the core annual reading printing at 3.1%. On a negative note, the monthly increase was 0.4%, surpassing the 0.3% anticipated and the previous 0.2%. Also, the country released Initial Jobless Claims for the week ended  September 6, which jumped to 263K from the previous 236K and was much higher than the expected 235K.

The US Dollar came under strong selling pressure after the dismal news, while Wall Street soared, as speculative interest rushed to price in Federal Reserve’s (Fed) interest rate cuts in the three meetings the central bank will have before year end.

Market’s attention now shifts to the Fed’s announcement scheduled for September 17.

XAU/USD short-term technical outlook

Technically, the XAU/USD pair has made no progress. It trades little changed for a third consecutive day, consolidating near record highs. The daily chart shows that the pair remains far above all its moving averages, with a bullish 20 Simple Moving Average (SMA) accelerating north above the longer ones. In the meantime, technical indicators barely eased from their recent peaks, still holding within overbought readings.

The near-term picture is neutral. In the 4-hour chart, the XAU/USD pair battles to recover above a bullish 20 SMA, while the 100 and 200 SMAs maintain their firm upward slopes far below the current level. Technical indicators in the meantime, pared their slides and turned north, although the Momentum indicator remains below its 100 line and shows no actual strength. Overall, Gold is likely to extend its consolidative phase, with minor bearish corrections on the docket.  

Support levels: 3,625.85 3,608.40 3,597.10

Resistance levels: 3,650.00 3,675.00 3,690.00