Gold Price Forecast: XAU/USD resumes north-side journey as USD Index remains under pressure

• Gold price has recovered after a minor corrective move amid a weak appeal for the USD Index.
• Fed Daly reiterated that two more rate hikes this year will likely be needed to bring down too-high inflation.
• Gold price is on the verge of delivering a breakout of the Inverted Head and Shoulder chart pattern.

Gold price (XAU/USD) has resumed its upside journey after a marginal correction to near $1,930.00 in the London session. The precious metal has found support as the US Dollar Index (DXY) is under extreme pressure ahead of Wednesday’s Consumer Price Index (CPI) data, which will be published at 12:30 GMT.

S&P500 futures have added some gains in Europe, following positive cues observed on Monday. Market sentiment is extremely bullish as investors have shrugged-off uncertainty associated with upcoming corporate earnings for major banks this week.

The US Dollar Index (DXY) has found intermediate support near 101.68. More downside in the USD Index seems favored as tight labor market conditions are releasing heat and inflationary pressures are expected to cool down further amid a decline in gasoline prices. The 10-year US Treasury yields have further dropped to near 3.96%.

As per the preliminary report, annualized headline CPI is expected to decelerate to 3.1% against the former release of 4.0%, and core inflation is seen softening to 5.0% vs. May’s figure of 5.3% in a similar period. Meanwhile, San Francisco Fed Bank President Mary Daly reiterated on Monday that she believes two more rate hikes this year will likely be needed to bring down too-high inflation in the face of a strong labor market.

Gold technical analysis

Gold price is on the verge of delivering a breakout of the Inverted Head and Shoulder chart pattern formed on a two-hour scale. A breakout of the aforementioned chart pattern will result in a bullish reversal. The neckline of the chart pattern is plotted around June 21 high at $1,935.00.

The 50-period Exponential Moving Average (EMA) at $1,923.43 is providing a cushion to the Gold bulls.

Meanwhile, the Relative Strength Index (RSI) (14) has jumped into the bullish range of 60.00-80.00, which indicates that the bullish momentum has been triggered.

Gold two-hour chart