Gold Price Forecast: XAU/USD clings to a key support area around $4,300

Gold (XAU/USD) remains close to a key support area around $4,300 on Friday as the US Dollar (USD) struggles to regain momentum before the US Consumer Price Index (CPI) release. The precious metal has been unable to surpass the $4,350 level, leaving the $4,300 support exposed. The current rally is hindered by high oil prices, which have driven global inflation and prompted central banks to implement tighter monetary policies.

The US Producer Price Index (PPI) data released on Thursday indicated a steepening of inflation to a 5.4% year-on-year rate in August, compared to 4.8% in July. Core PPI also rose to 4.6% year-on-year from 4.3% the previous month. Investors are increasingly betting on a Federal Reserve (Fed) rate hike next week, with the focus now shifting to the US CPI release, which will be closely scrutinized to validate these expectations.

XAU/USD is currently trading at $4,344, retaining a slight bearish outlook as it hovers near the neckline of a bearish Head & Shoulders (H&S) pattern. Momentum indicators suggest a moderate, though gradually intensifying, bearish pressure as the Relative Strength Index (RSI) dips further below the 50 level and the Moving Average Convergence Divergence (MACD) enters negative territory.

The market has yet to surpass the September 8 and 9 lows at $4,350, which would open the path to Thursday's highs near the 200-day SMA at $4,538. A bearish shift below $4,282 could trigger the H&S pattern and intensify pressure towards the August 6 low of $4,220. If this occurs, the H&S's measured target would sit just below the year-to-date lows in the $3,940 range.