Gold Price Forecast: XAU/USD dips back closer to $1,915 on modest US Dollar uptick
- Gold price edges lower on Monday and stalls its recent recovery from a multi-month low.
- Bets for more rate hikes by Federal Reserve revive US Dollar demand and exert pressure.
- Economic woes could limit losses for the XAU/USD ahead of this week’s US macro data.
Gold price kicks off the new week on a softer note and for now, seems to have stalled the recent recovery from the $1,893-$1,892 area, or its lowest level since mid-March touched last Thursday. The XAU/USD currently trades around the $1,916-$1,917 region, down nearly 0.20% for the day.
Modest US Dollar uptick weighs on Gold price
The US Dollar (USD) attracts some buyers and recovers a part of Friday's heavy losses, which, in turn, is seen as a key factor weighing on the Gold price. Data released from the United States (US) on Friday showed that the Personal Consumption Expenditures (PCE) Price Index decelerated to 3.8% in May from 4.3% previous. Furthermore, the Core PCE Price Index, excluding the volatile food and energy components, ticked down to 4.6% during the reported month from 4.7% in April. The gauge, however, remains well above the Fed's 2% target and supports prospects for further policy tightening.
Hawkish major central banks also undermine XAU/USD
In fact, the current market pricing indicates a nearly 85% chance of a 25 basis points (bps) lift-off at the next Federal Open Market Committee policy meeting on July 25-26. Moreover, Fed Chair Jerome Powell reiterated last week that borrowing costs may still need to rise as much as 50 bps by the end of this year. This, in turn, remains supportive of elevated US Treasury bond yields and acts as a tailwind for the Greenback. Apart from this, a more hawkish outlook by other major central banks further seems to undermine demand for the safe-haven Gold price and contributes to a modest intraday downtick on Monday.
Economic woes could limit losses for Gold price
That said, worries about a global economic downturn, particularly in China, could lend some support to the safe-haven precious metal and help limit deeper losses, at least for the time being. The market concerns, meanwhile, remain intact following the release of a slightly better-than-expected Chinese Manufacturing Purchasing Managers' Index (PMI), which came in at 50.5 for June, though marked a slowdown from the previous month's reading of 50.9. This might hold back traders from placing fresh bearish bets around Gold price ahead of key macro US data scheduled at the beginning of a new month.
Investors look to important releases from US for fresh impetus
The release of the US ISM Manufacturing PMI, due later during the early North American session this Monday, marks the beginning of a rather busy week, which also features the closely-watched US monthly employment details. The focus, however, will remain glued to the FOMC meeting minutes on Wednesday, which will play a key role in influencing the USD price dynamics and provide some meaningful impetus to the Gold price. Nevertheless, the aforementioned fundamental backdrop seems tilted in favour of bearish traders and suggests that the path of least resistance is to the downside.
Gold price technical outlook
From a technical perspective, any subsequent slide is likely to find some support near the $1,900 round-figure mark ahead of the multi-month low, around the $1,893-$1,892 region. Some follow-through selling will make the Gold price vulnerable to accelerate the slide towards the very important 200-day Simple Moving Average (SMA), currently around the $1,859 area.
On the flip side, momentum beyond the $1,922 immediate barrier is likely to confront stiff resistance near the $1,936 horizontal zone. This is closely followed by the 100-day SMA, around the $1,942 region, which if cleared decisively might trigger a short-covering rally. The Gold price might then accelerate the recovery towards the $1,962-$1,964 hurdle en route to the $1,970-$1,972 supply zone. Some follow-through buying should allow bulls to reclaim the $2,000 psychological mark and test the $2,010-$2,012 resistance.
Key levels to watch