Gold Price Forecast: Will XAU/USD gain acceptance above 21 DMA on US GDP?

• Gold price is capitalizing on the post-Fed US dollar sell-off.
• US Treasury yields rebound, challenging the recovery momentum.
• XAU/USD eyes US Q2 GDP for a fresh directional impetus.

Gold price is preserving its less hawkish Fed-induced gains so far this Thursday, as bulls are biding time ahead of the US advance Q2 GDP release. The Fed raised rates by the expected 75 bps at its July policy meeting but abandoned its forward guidance, disappointing the hawks. Fed Chair Jerome Powell and Company’s meeting-by-meeting approach, based on the incoming data, poured cold water on aggressive tightening expectations, despite the Fed dismissing a US recession. This triggered a sharp sell-off in the Treasury yields across the curve, dragging the US dollar sharply lower while boosting the bright metal.  

XAU buyers also take it easy heading into the US GDP print, which could likely show a negative reading for the second month in a row, throwing the American economy into a so-called technical recession. Economists are predicting a 0.4% growth QoQ in Q2 vs. -0.1% reported previously. Will the world’s largest economy avert a recession?

Also read: US Gross Domestic Product Preview: Would the US avoid a technical recession?

Markets also digest expectations of slowing gold demand for the second half of this year, as predicted by the World Gold Council (WGC). In the meantime, gold traders will continue to take cues from the broader market sentiment and the dynamics of the dollar and yields for near-term trading opportunities.

Gold price technical outlook: Daily chart

Gold price is flirting with the bearish 21-Daily Moving Average (DMA) at $1,738 after briefly recapturing the latter, earlier on.

The 14-day Relative Strength Index (RSI) is inching higher but still remains below the midline, suggesting that the post-Fed recovery could be short-lived.

Only daily closing above the 21 DMA will likely confirm a bearish reversal from 16-month lows of $1,681. On the upside, the $1,750 psychological barrier will be next on buyers’ radars, followed by the July 8 high of $1,752.

Alternatively, the immediate support is seen at $1,730 the round figure, below which Wednesday’s low of $1,712 could be tested. The $1,700 threshold will be the last line of defense for gold bulls.