Gold Price Forecast: XAU/USD declines as bulls hesitate near $3,400, US inflation in focus

• Gold price declines to near $3,350 amid uncertainty surrounding the US CPI data.
• The US inflation is estimated to have grown at a faster pace for July.
• Investors await Trump-Putin high-stakes meeting.

Gold price (XAU/USD) trades 1.2% lower to near $3,350 during the European trading session on Monday. The yellow metal faces selling pressure as investors shift their focus to the United States (US) Consumer Price Index (CPI) data for July, which is scheduled to be released on Tuesday.

Investors will closely monitor the CPI data as it will indicate whether the impact of tariff-driven inflation is one-time or persistent. June's CPI report showed an increase in prices of products, which are largely imported into the US.

Economists expect the headline and the core CPI - which excludes volatile food and energy prices - rose at a faster pace of 2.8% and 3.0% on year, respectively.

Escalating inflationary pressures might force traders to reassess bets supporting interest rate cuts by the Federal Reserve (Fed) in the September meeting.

According to the CME FedWatch tool, there is an 88% chance that the Fed will cut the Federal Funds Rate by 25 basis points (bps) to the range between 4.00% and 4.25%.

Gold price performs strongly in a high-inflation environment; however, the maintenance of a restrictive monetary policy stance by the Fed bodes poorly for non-yielding assets, such as Gold.

Meanwhile, investors also await a high-stakes meeting between US President Donald Trump and Russian leader Vladimir Putin, which is scheduled for next Friday, to discuss ending the war in Ukraine.

Gold technical analysis

Gold price slumps to near $3,350 on Monday. The precious metal trades in a Symmetrical Triangle, which indicates a sharp volatility contraction.

The yellow metal corrects to near the 20-day Exponential Moving Average (EMA) around $3,357.00.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting indecisiveness among market participants.

Looking down, the Gold price would fall towards the round-level support of $3,200 and the May 15 low at $3,121, if it breaks below the May 29 low of $3,245

Alternatively, the Gold price will enter uncharted territory if it breaks above the psychological level of $3,500 decisively. Potential resistances would be $3,550 and $3,600.

Gold daily chart