Gold Prices: XAU/USD approaches $1,970 as USD Index’s pullback seems less confident, US CPI eyed

NEW YORK (June 9) Gold price (XAU/USD) has resumed its upside journey towards the $1,970.00 resistance in the European session. The precious metal is repossessing the spotlight as the recovery move in the US Dollar Index (DXY) seems less confident due to the absence of fundamental support.

S&P500 futures have surrendered half of the gains posted on Thursday as investors are shifting their focus toward the release of the United States Consumer Price Index (CPI) data. Market sentiment has turned cautious as the US inflation release could bring variation in expectations for the Federal Reserve (Fed) policy for June.

As per the preliminary report, headline inflation is seen softening to 4.2% vs. the prior release of 4.9%. Core CPI that strips off oil and food prices is expected to accelerate marginal to 5.6% vs. the former release of 5.5%. If core inflation continues to remain persistent, Fed chair Jerome Powell could be more favorable for the continuation of the policy-tightening spell.

Earlier, the street was divided about Fed’s policy stance but now easing labor market conditions have improved the odds of a neutral policy stance by the Fed. The USD Index has extended its recovery to near 103.60. Also, the yields offered on 10-year US Treasury bonds have climbed to 3.74%.

Gold technical analysis

Gold price is gathering strength for a breakout of the Symmetrical Triangle chart pattern formed on an hourly scale. A breakout of the neutral triangle results in wider ticks and heavy volume. The precious metal is hovering near the downward-sloping trendline of the aforementioned pattern plotted from June 02 high at $1,983.50.

The yellow metal is trading above the 50-period Exponential Moving Average (EMA) at $1,959.70, which adds to the upside filters.

A confident break into the bullish range of 60.00-80.00 by the Relative Strength Index (RSI) (14) will trigger the upside momentum.

FXStreet