Gold Price Forecast: XAU/USD slips below $1,750 as inflation woes favor USD bulls

• Gold stays pressured at yearly low, fades Asian session rebound.
• DXY refreshes 20-year high amid traders’ rush to risk-safety.
• Chatters surrounding recession could entertain traders ahead of Wednesday’s US CPI.

Gold Price (XAU/USD) remains depressed at the lowest levels since September 2021 as risk-aversion favors US dollar bulls heading into Tuesday’s European session. That said, the yellow metal lounges to $1,728 by the press time.

Growing fears of an economic slowdown could be cited as the key catalyst behind the XAU/USD’s latest weakness. Also weighing on the metal prices could be fears of higher inflation and central bankers’ aggression led by the US Federal Reserve (Fed).

Recently, an impending halt in Russian gas supplies through Nordstorm 1 pipeline joins record US inflation expectations, per the NY Fed’s survey of one-year-ahead consumer inflation expectations, to weigh on the gold prices. On the same line could be looming nationwide covid lockdowns in China after fresh activity restrictions on Henan Province’s Wugang.

It should be noted that comments from White House Press Secretary Karine Jean-Pierre, suggesting expectations of highly elevated Consumer Price Index (CPI) data join hawkish Fedspeak to drown the XAU/USD prices. At the latest, Atlanta Fed President Raphael Bostic said that recent inflation data has not been as encouraging as I would have liked, per Reuters.

Amid these plays, US equities remained depressed and the US Treasury yields kept flashing recession fears by inversion of the 10-year and 2-year Treasury yields curves. Further, Asian stocks and S&P 500 Futures also remain pressured at the latest.

Moving on, chatters surrounding recession and inflation will be important to track ahead of Wednesday’s US Consumer Price Index for June, expected 8.8% versus 8.6% prior.

Technical analysis

Gold stays pressured inside a monthly bearish megaphone pattern suggesting a further widening of the downtrend, between $1,800 and $1,716 by the press time.

Considering the oversold RSI (14), the odds of witnessing a corrective pullback towards the weekly resistance line and 50-SMA, respectively around $1,737 and $1,770, can’t be ruled out. However, the previous support line from mid-June, close to $1,775 at the latest, could challenge the XAU/USD bulls afterward.

On the contrary, the $1,700 threshold and late 2021 bottom around $1,677 could lure gold sellers in case Gold Price drops below $1,716 key support.

Gold: Four-hour chart

Trend: Bearish