• Gold prices have sensed demand around $1,685.00 as DXY has faced hurdles around 113.00.
• The risk-off sentiment is still intact as S&P500 has extended its losses.
• The US headline CPI may decline to 8.1% while the core CPI would scale up to 6.5%.

Gold price (XAU/USD) has defended the downside break of the rangebound structure formed in a narrow range of $1,685.30-1,689.33 in the early European session. Value bets on the gold prices have been followed by the struggling US dollar index (DXY) around the round-level resistance of 113.00.

The risk-off sentiment is still intact as S&P500 has extended its losses. It is worth noting that US markets will be closed on Monday on account of Columbus Day. In spite of that, S&P 500 futures have followed the pessimism witnessed on Friday.

The yellow metal will continue to remain on tenterhooks as firmer US Nonfarm Payrolls (NFP) has given a green signal to the Federal Reserve (Fed) to continue hiking interest rates with bigger figures. This has infused fresh confidence in the Fed to keep up their ongoing pace of hiking interest rates to bring price stability in the economy.

Going forward, the release of the US Consumer Price Index (CPI) data will be of utmost importance. As per the estimates, the headline inflation rate will decline to 8.1% while the core CPI that excludes oil and food prices will shore up to 6.5%.

Gold technical analysis

On an hourly scale, gold prices have surrendered the 38.2% Fibonacci retracement (placed from September 28 low at $1,614.85 to October 4 high at $1,729.58) of $1,685.50. The precious metal has dropped below the 200-Exponential Moving Average (EMA) at $1,692.18, which has turned the major trend to the downside.

Also, the Relative Strength Index (RSI) (14) has shifted into the bearish range of 20.00-40.00, which adds to the downside filters.

Gold hourly chart