Gold Price Forecast: XAU/USD gallops to near $1,950 as US inflation softens beyond expectations

Gold price has climbed strongly to $1,950.00 as US inflation has softened more than expectations.
The US Dollar Index has plunged as the Fed would have the luxury of skipping interest rates further.
Gold price is expected to deliver an Inverted H&S breakout after surpassing the neckline plotted around $1,940.00.

Sagar Dua FXStreet

Gold price (XAU/USD) has displayed a stellar run as the United States Bureau of Labor Statistics has reported softer-than-expected June Consumer Price Index (CPI) data. The monthly headline and core inflation has reported a pace of 0.2% while investors were anticipating a higher velocity of 0.3%.

Annualized headline CPI has softened to 3.0% vs. the consensus of 3.1% and the former release of 4.0%. While annualized inflation has decelerated to 4.8% against the estimates of 5.0% and the prior release of 5.3%. More-than-anticipated cool-down in inflationary pressures would trim expectations of an interest rate hike by the Federal Reserve (Fed) in its July monetary policy meeting.

Meanwhile, S&P500 futures have jumped strongly as soft inflation figures have eased fears of a recession in the United States. The US Dollar Index (DXY) has demonstrated a vertical fall to near the crucial support of 101.00. The yields offered on 10-year US Treasury bonds have sharply dropped to 3.88%.

Going forward, investors will focus on Thursday’s Producer Price Index (PPI) data. As per the consensus, monthly PPI is expected to register a pace of 0.2% vs. a contraction of 0.3%. It looks like a mild recovery in gasoline prices has propelled factory gate prices.

Gold technical analysis

Gold price is gathering strength to deliver 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 $1,940.00.

The 20-period Exponential Moving Average (EMA) at $1,932.90 is providing cushion to the Gold bulls.

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

Gold two-hour chart

XAU/USD

Overview
Today last price	1934.05
Today Daily Change	1.79
Today Daily Change %	0.09
Today daily open	1932.26

Trends
Daily SMA20	1927
Daily SMA50	1959.16
Daily SMA100	1949.73
Daily SMA200	1868.82

Levels
Previous Daily High	1938.54
Previous Daily Low	1924.44
Previous Weekly High	1935.09
Previous Weekly Low	1902.77
Previous Monthly High	1983.5
Previous Monthly Low	1893.01
Daily Fibonacci 38.2%	1933.15
Daily Fibonacci 61.8%	1929.83
Daily Pivot Point S1	1924.95
Daily Pivot Point S2	1917.65
Daily Pivot Point S3	1910.85
Daily Pivot Point R1	1939.05
Daily Pivot Point R2	1945.85
Daily Pivot Point R3	1953.15

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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