Gold Price Forecast: XAU/USD holds gains above $3,340 with US inflation on tap

• Gold found support at $3,340 and is regaining lost ground, approaching $3,380 highs.
• The US Dollar softens with US treasury yields pulling back from recent highs ahead of the US CPI release.
• From a wider perspective, XAU/USD is moving sideways, halfway through the last few months' trading range.

Gold (XAU/USD) correction has been limited at $3,340, and the precious metal is retracing previous losses on Tuesday, approaching three-week highs at $3,380 as US Treasury yields and the US Dollar pull back from recent highs ahead of the US CPI release.

The US Dollar Index, which measures the value of the USD against six major currencies, is trading 0.15% lower on the day after a three-day rally. Investors are bracing for a significant increase in inflation amid pressure from US President Trump to cut interest rates, which might increase if the upside risks for inflation forecasted by the bank do not materialise.

Technical analysis: XAU/USD consolidating halfway through the recent range

The XAU/USD technical picture is cloudy, as the pair has been experiencing choppy and sideways trading for the last few months. Price action is currently hovering in the middle of the range, and technical indicators on the daily chart are indicating a lack of a clear trend.

The 4-hour chart shows a moderate positive stance, with the RSI steady above the 50 level and downside attempts finding buyers so far. Bulls are focusing on the July 14 high, at $3,375, which is closing the path towards the June 18 and 23 highs, at the $3,400 area, and the June 16 peak, at $3,450. 

On the downside, a retreat below the July 14 low at $3,340 might find support at the July 10 low at $3,3120 and the July 9 low, at $3,285, ahead of the May 28 and June 30 lows, at $3,245.