Gold Price Forecast: XAU/USD recovers some lost ground around $1,940, US CPI data eyed

Gold price (XAU/USD) trades in positive territory during the early Asian session on Monday. The consolidation of the US Dollar (USD) lends some support to the precious metal. However, the higher US Treasury bond yield might cap gold's upside in the next session. At press time, the gold price is trading around $1,940, up 0.22% on the day.

On Friday, Federal Reserve (Fed) Bank of San Francisco President Mary Daly said she is not ready to say yet whether the central bank is done raising its interest rate cycle to bring inflation back to 2%. While, Fed Chair Jerome Powell stated that if it becomes appropriate to tighten policy further, Fed will not hesitate to do so. Traders will take more cues from the key data this week, including the US Consumer Price Index (CPI). The stronger-than-expected data might raise the odds that Fed to hike the rate again in its December meeting. It's worth noting that rising interest rates raise the opportunity cost of investing in non-yielding assets, implying a negative outlook for precious metals.

Furthermore, concern over economic growth in China might drag the gold price lower as China is the world's largest gold producer and consumer. Last week, the Chinese CPI dropped 0.2% in October from the previous reading of 0%. This week’s Chinese Retail Sales and Industrial Production will be released and these data could offer some hints about China’s economic condition.

The key event will be the US Consumer Price Index (CPI) on Tuesday. The monthly CPI reading is expected to ease to 0.1% in October while the core CPI is estimated to remain unchanged at 0.3%. These events could give a clear direction to the gold price.