Gold Price Forecast: Will XAU/USD defend 100 DMA support ahead of US Services PMI?

• Gold price licks its wounds as US Dollar consolidates strong US Nonfarm Payrolls-led gains.
• Weakening Indian physical demand offsets bets for the US Federal Reserve pause in June.
• $1,939 is the last line of defense for Gold buyers as RSI turns bearish once again.

Gold price is consolidating Friday’s heavy losses while ranging below the $1,950 level early Monday. Stunning United States Nonfarm Payrolls (NFP) day saved the day for the US Dollar (USD) and the US Treasury bond yields. All eyes now remain on the US ISM Services PMI for fresh trading incentives.

United States Services PMI next in focus

The US Dollar is holding the recent recovery gains in Monday’s Asian session so far, looking to extend Friday’s upturn led by an unexpected jump in the United States headline Nonfarm Payrolls numbers. The NFP report showed that the US economy added 339K jobs in May vs. 190K expected and the upwardly revised previous reading of 294K. The wage inflation component in the jobs report softened to 4.3%, while the Unemployment Rate in the US ticked higher to 3.7% in the reported period, compared with expectations of 3.5%.

In response to the solid NFP data, Gold price snapped its three-day rebound and eroded almost $30. Gold price also bore the brunt of a sharp recovery in the US Treasury bond yields across the curve even as markets continued to price a 75% probability that the US Federal Reserve (Fed) will pause at the June 13-14 policy meeting following the mixed US employment data. The risk-on market profile on increased bets of a Fed pause this month killed the demand for the US government bonds, triggering a staggering rally in the US Treasury bond yields.

Gold price was undermined by the report that physical gold demand slowed in India last week as a recovery in domestic prices prompted buyers to postpone purchases. In Monday’s trading so far, a cautiously optimistic market mood and a broad US Dollar advance are keeping Gold sellers alive and kicking.

Investors benefit from an improvement in China’s Caixin Services PMI, which rose from 56.4 in April to 57.1. Further, OPEC+ oil output cuts announcements lifted oil prices and underpinned risk sentiment. However, uncertainty over the Fed’s next policy move and anxiety ahead of the US ISM Services PMI keep risk appetite in check. The headline ISM Services PMI is seen easing to 51.5 in May vs. 51.9 prior. Meanwhile, the ISM Services Price Paid for May will drop to 57.8 from 59.6 previous. Dismal US data are likely to add to the Fed pause narrative, which could resume the downside in the US Dollar. If risk sentiment deteriorates, the safe-haven US Dollar could find fresh demand, weighing further on the Gold price.

Gold price technical analysis: Daily chart

Gold price defied the bullish outlook as the 14-day Relative Strength Index (RSI) flipped back below the 50 level, which separates the bullish and bearish zones.

The Bear Cross also remained in play as Gold buyers faced rejection again at the downward-sloping 21-Daily Moving Average (DMA), now at $1,979.

The immediate support now awaits at the flattish 100 DMA at $1,939. Daily closing below the latter will resume the correction in the Gold price toward the $1,900 barrier.

Ahead of that, the March 17 low at $1,918 could rescue Gold buyers.

However, Gold optimists continue to trade cautiously amid a Bear Cross in play and ahead of the critical United States labor market report.

Conversely, any recovery will turn meaningful only on acceptance above the 21 DMA resistance, above which the 50 DMA at $1,991 will challenge the bearish commitments.

Acceptance above these resistance levels will put the $2,000 threshold back on bulls’ radars.