Gold price forecast: The XAU/USD rebounds on reports of a lower US dollar and a return to risk-on

Gold recovers from an intraday drop to the $1,784–$1,783 range and reaches a new daily high during the early North American session. But bulls are having trouble capitalizing on the trend and pushing XAU/USD back above $1,800.

Gold prices in dollars is supported by the fact that the US dollar is having a hard time finding buyers and is still very close to its lowest level since late June. Investors cut their wagers on a 75 bps rate hike by the Federal Reserve at the September policy meeting after US consumer inflation data reported on Wednesday came in lower than expected. The dollar is further weakened, and the non-yielding yellow metal gains in value, as a result of this and a new leg down in US Treasury bond yields.

For the time being at least, the risk-on sentiment restrains additional advances for the safe-haven gold. Inflation fears persist, but there are some indicators that the rate of increase may have plateaued. This has led to calls for the US central bank to ease up on its policy tightening. This coming Thursday's announcement of the US Producer Price Index (PPI) will further reinforce market expectations and bolster investor confidence. The commodity is facing a headwind due to the robust performance of the equity markets.

Gold's potential gains could be limited by the fact that the Federal Reserve is widely predicted to raise interest rates by at least 50 basis points in September. To prepare for any additional appreciating rise, it would be advisable to wait for some follow-through buying beyond the $1,808 level, a five-week high set on Wednesday. However, the intraday rebound from the 50-day SMA's solid support floor favors optimistic traders and indicates that any significant retreat may still be considered as a buying opportunity.