Gold Price Forecast: Bear Cross confirmation to threaten 100 DMA support again

Gold price is fading the previous rebound above the $1,950 mark, as the United States Dollar (USD) is seeing a fresh uptick amid a risk-on market profile. Attention now turns toward the House of Representatives vote on the US debt deal agreed between US President Joe Biden and Kevin McCarthy last Sunday.

United States Dollar finds demand amid resurfacing China worries

Risk aversion remains the underlying theme early Wednesday, as resurfacing worries over China’s economic recovery, combined with anxiety ahead of the US debt deal vote, leave investors scurrying to safety in the US Dollar at the expense of Gold price. Safe-haven flows into the US government bonds are weighing negatively on the US Treasury bond yields across the curve, which could limit the downside in Gold price.

China's official Manufacturing Purchasing Managers' Index (PMI) came in at 48.8 in May, against the 49.2 contraction in April. The index hit a five-month low, ending below the 50 mark separating expansion from contraction. The downbeat rekindled concerns over a slowing Chinese economy while suggesting that the policymakers could roll out urgent stimulus measures to stimulate growth. As the world’s top Gold consumer, China's economic woes also add to the weight of the bright metal.

Additionally, investors will only place fresh bets on Gold price ahead of the key Congressional vote on suspending the US debt ceiling in January 2025. Markets remain unnerved after “the House rules committee voted 7-6 late Tuesday to allow debate by the full chamber, with two committee Republicans opposing the bill. Their opposition underscored the need for Democrats to help pass the measure in the House, which is controlled by Republicans with a narrow majority,” per The Guardian.

Meanwhile, Gold traders will also pay close attention to the United States JOLTS Job Openings data for April, especially after the Conference Board Consumer Confidence dipped slightly to 102.3 in the reported period, compared with the previous reading of 103.7.

Many US Federal Reserve (Fed) policymakers will make it a busy American trading as investors await Friday’s US Nonfarm Payrolls data for fresh cues on the Fed’s interest rates outlook. Markets are currently pricing a 60% chance of a 25 basis points (bps) June Fed rate hike.

Gold price technical analysis: Daily chart

So long as the  14-day Relative Strength Index (RSI) remains below the 50 level, Gold price remains vulnerable and a ‘sell on rise’ trade.

Gold price is awaiting a Bear Cross confirmation on a daily closing basis, as the 21 DMA has pierced the 50 DMA from above.

The immediate downside remains guarded by the mildly bullish 100-daily moving average (DMA) at $1,938.

Daily closing below the 100 DMA support is critical to resume the correction toward the March 17 low at $1,918.  Ahead of that, the previous day’s low at $1,932 will lend some support to Gold bulls.

Conversely, Gold buyers must find a strong foothold above the $1,960 round figure to add legs to the recent rebound.  Up next, the $1,970 static resistance could be a tough nut to crack for Gold buyers, above which the confluence of the 21 and 50 DMAs near $1,990 could be challenged.