The price of gold fell sharply overnight, and weakness is extending through Thursday’s Asia-Pacific trading session. XAU/USD is down nearly 5% from earlier this week, when bullion prices were trading at the highest levels seen since August 2020. Bulls scored a major victory by clearing the 2,000 level on Tuesday, but a deep pullback in risk aversion has sapped the yellow metal’s luster.
Traders are preparing for the United States to report its latest consumer price index (CPI) data for February. Analysts see the US inflation rate rising to 7.9%. That would be the highest year-over-year print since January 1982, when inflation was at 8.4%.

A higher-than-expected print may add to current inflationary woes, which may drive bullion prices higher. Such a move may be amplified by worries that the war in Ukraine might cause the Federal Reserve to hold back a more aggressive response to price growth, in a bid to smooth over the impact any broad-based economic instability linked to the crisis. That said, the most potent near-term XAU drivers will likely rely on market volatility and inflation expectations, particularly in the United States and Europe.
After breaking below the 2000 psychological level, bulls may try to find support at the rising 9-day Exponential Moving Average (EMA). A break lower would put 1900 back into focus, a level breached just a few weeks ago. Alternatively, piercing back above 2000 could renew a push up to target the 2022 high at 2070.42. The Relative Strength Index (RSI) fell from overbought conditions while MACD appears to be weakening. 

Trade accordingly with your risk