Gold Price Forecast: Will XAU/USD defend 21-day SMA on a daily closing basis?

Gold halts its correction as sellers take a breather, with the NFP week kicking in.
The US Dollar fades its recovery stint as markets weigh a Fed under Warsh. Geopolitical tensions seem to ease.
Technically, RSI flirts with midline on the daily chart; Gold is at a critical crossroads.

Dhwani Mehta FXStreet

Gold has paused its corrective downside, recapturing the $4,700 level after having tested bids under the $4,600 mark in early Asian trades on Monday.

Gold looks to US ISM Manufacturing PMI, US-Iran updates

Despite the minor pullback from three-week lows of $4,585, Gold remains under bearish pressures as US Dollar (USD) buyers refuse to give up amid stalled recovery.

The traditional safe-haven, Gold, still faces headwinds from easing geopolitical tensions between the United States (US) and Iran, as markets breathe a sigh of relief on Kevin Warsh’s nomination by President Donald Trump on Friday as the next Federal Reserve (Fed) Chairman.

Trump said over the weekend that the US will "hopefully" make a deal with Iran after Supreme Leader Ayatollah Ali Khamenei warned of a regional conflict if Washington attacked.

Meanwhile, markets view Warsh as a proponent of lower interest rates. However, “they expect him to rein in the Fed's balance sheet, which is typically supportive for the dollar as it reduces the money supply in the market,” per Reuters.

Looking ahead, all eyes will be on the geopolitical developments between the US and Iran and the upcoming US economic data – the top-tier US ISM Manufacturing PMI.

The ISM data will set the tone for markets, bracing for the critical employment figures that will trickle in this week.

The data flow will help reprice markets’ expectations of further rate cuts by the Fed, with the first cut for this year likely seen in June following the January Fed policy announcements.

That being said, traders will also pay close attention to the short-term technical outlook for Gold, with the daily chart currently showing a mixed picture, exposing two-way risks.

Gold price technical analysis: Daily chart

The Simple Moving Averages (SMA) advance in bullish alignment, with the 21-day above the 50-, 100- and 200-day, and all slopes pointing higher. Price trades beneath the 21-day but holds above the 50-day, indicating a pause within the prevailing uptrend.

The Relative Strength Index (RSI) sits at 49 (neutral), suggesting that the downside momentum could be cooling.

The 21-day SMA at $4,766.85 caps the upside, while the 50-day SMA at $4,488.01 offers initial support. A daily close above the former could extend gains.

Longer-term SMAs continue to rise, reinforcing the broader bullish bias, with the price holding above the 100- and 200-day markers. This configuration suggests the trend remains supported by higher-timeframe averages. With the RSI near 50, consolidation could persist before the next directional move. Deeper support aligns at the 100-day SMA at $4,234.81, while the 200-day SMA at $3,798.20 anchors the medium-term trend. Holding above these levels would keep the path skewed to the upside.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

ISM Manufacturing PMI

The Institute for Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI), released on a monthly basis, is a leading indicator gauging business activity in the US manufacturing sector. The indicator is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. Survey responses reflect the change, if any, in the current month compared to the previous month. A reading above 50 indicates that the manufacturing economy is generally expanding, a bullish sign for the US Dollar (USD). A reading below 50 signals that factory activity is generally declining, which is seen as bearish for USD.

Why it matters to traders?

The Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) provides a reliable outlook on the state of the US manufacturing sector. A reading above 50 suggests that the business activity expanded during the survey period and vice versa. PMIs are considered to be leading indicators and could signal a shift in the economic cycle. Stronger-than-expected prints usually have a positive impact on the USD. In addition to the headline PMI, the Employment Index and the Prices Paid Index numbers are watched closely as they shine a light on the labour market and inflation.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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