Forecast for the Gold Price: XAU/USD struggles near $2,020 as the US Dollar Index defends its downside

After reaching the critical resistance of $2,020.00 in the Tokyo session, the gold price (XAU / USD) has shown depletion in its upward momentum. As the impact of a slowdown in U.S. inflation would persist for an extended period of time, the precious metal's bullish bias remains strong. After testing its critical low of 101.44, the US Dollar Index (DXY) has shown some resilience, as the lower US Consumer Price Index (CPI) has failed to diminish the likelihood of consecutive 25 basis point (bps) rate hikes from the Federal Reserve (Fed).

According to the CME Fedwatch instrument, the probability of a 25 basis point rate increase at the monetary policy meeting in May is greater than 68%.

Moreover, S&P500 futures have extended their gains since Wednesday's pessimistic close, indicating a recovery in the risk-on sentiment.

Examining the US inflation report reveals that headline inflation has decreased more than anticipated to 5%, as a result of lower petroleum prices. The investing community is aware that oil prices have rebounded substantially in April following the unexpected announcement of production cuts by OPEC+, which could disrupt the party for Gold Bulls.

Contrary to the headline inflation rate, the core CPI has increased to 5.6% from 5.5% in the previous report as rent prices remained stable. This suggests that core inflation could remain exceedingly persistent in the future.

As reported by Reuters, San Francisco Fed Bank President Mary Daly stated late Wednesday, "There's a lot more monetary policy tightening in the pipeline." She refrained, however, from predicting the end of the tightening cycle.