Gold Price Forecast: XAU/USD looks set to prod $1,945 hurdle on softer US Dollar

Gold Price (XAU/USD) remains sidelined around $1,921, after rising to the highest level in a week, as markets seek more clues during early Tuesday in Asia after witnessing a softer start to the week. It’s worth noting that the United States Independence Day holiday restricts the market performance but the recently downbeat US data weigh on the greenback and keeps the Gold Price on the bull’s radar. Adding strength to the XAU/USD price could be the hopes of witnessing improvement in the US-China ties and optimism in India, one of the world’s top Gold customers.

Gold Price marches as softer United States data weigh on US Dollar

Gold Price cheer downbeat United States statistics while paying no attention to the hawkish Federal Reserve (Fed) bets as the US Dollar retreats from a three-week high.

On Monday, US ISM Manufacturing PMI for June dropped to the lowest level in three years, as well as stayed below the 50.0 level for the seventh consecutive month, as it marked 46.0 figure versus 47.2 expected and 46.9 prior. Further details reveal that the ISM Manufacturing Employment Index slide to a three-month low of 48.1 in June from 51.4 previous readings but the New Orders Index improved to 45.6 from 42.6 marked in May and 44.0 maket forecasts. Additionally, the ISM Manufacturing Prices Pair nosedived to the lowest since April 2020, to 41.8, during the said month from 44.2 previous readings.

On a different page, S&P Global Manufacturing PMI for June confirmed 46.3 figure, the lowest in five months, whereas the Construction Spending improved 0.9% MoM for May, versus 0.5% expected and 0.4% previous readouts.

It should be noted that the US Gross Domestic Product (GDP) and Durable Goods Orders, released the last week, improved but failed to gain support from the Fed’s preferred inflation gauge, namely the US Personal Consumption Expenditure (PCE) Price Index. Additionally, personal spending also eased and hence challenges the hawkish Fed bias while fueling the Gold Price.

That said, the interest rate futures suggest 85% probability of witnessing a 25 basis points (bps) of Fed rate hike in July. On the same line, Reuters said, “Futures markets had reflected rate cuts at the Fed's September meeting as recently as May, and are now projecting that the first cuts will come in January.” The market's hawkish Fed bets could be linked to the last week’s hawkish comments from the Federal Reserve Officials at the European Central Bank (ECB) Forum in Sintra, which in turn caps the Gold Price despite the XAU/USD bull’s optimism.

China, India headlines lure XAU/USD bulls

While softer US data and downbeat US Dollar propel the Gold Price, upbeat catalysts surrounding the world’s top two XAU/USD customers, namely India and China, add strength to the metal’s run-up. Recently, a jump in the Foreign Portfolio Investors (FPIs) rush toward India raised concerns about major Gold demand from the Asian nation. As per the latest update, the FPIs have parked the biggest sum in 10 months in India, not to forget marking the fourth consecutive advance.

On the other hand, the US Treasury Secretary Janet Yellen’s China visit during July 06-09 period witnessed mixed responses from the Gold traders. While the news appears positive for the sentiment on the front, the details seem less impressive as US Treasury Secretary Yellen is likely to flag concerns about human rights abuses against the Uyghur Muslim minority, China's recent move to ban sales of Micron Technology memory chips, and moves by China against foreign due diligence and consulting firms, per Reuters.

It should be noted that the better-than-forecast China’s Caixin Manufacturing PMI, to 50.5 for June versus 50.9 prior and 50.2 market expectations, favor the odds of witnessing more stimulus from Beijing, which in turn can help the Gold Price to remain firmer.

US holiday to restrict Gold Price moves but bulls can keep the reins

While most of the aforementioned catalysts are in favor of the Gold buyers, the United States Independence Day holiday will restrict the XAU/USD moves. The same highlights headlines surrounding China and India to watch carefully for clear directions while allowing the Gold buyers to keep the reins. It should be noted that this week’s Federal Reserve (Fed) Monetary Policy Meeting Minutes and Nonfarm Payrolls (NFP) are the key data that will determine the near-term Gold Price directions.

Gold Price Technical Analysis

Gold Price run-up justifies the previous week’s upside break of a fortnight-old resistance line, now support around $1,911. Adding strength to the bullish bias about the XAU/USD is Thursday’s Dragonfly Doji candlestick.

Furthermore, the impending bull cross on the Moving Average Convergence and Divergence (MACD) indicator joins an upward-sloping Relative Strength Index (RSI) line, placed at 14, to also favor the Gold buyers.

With this, the Gold Price appears well-set to confront a convergence of the 100-DMA and a downward-sloping resistance line from early June, around $1,945.

However, the XAU/USD’s upside past $1,945 appears bumpy as multiple resistances near $1,985 and the $2,000 psychological magnet will challenge the bullion buyers before giving them control.

On the flip side, the Gold sellers could return to the table on witnessing a downside break of the previous resistance line, close to $1,911. Though, an eight-month-old horizontal support region, close to $1,985-92, appears a tough nut to crack for the XAU/USD bears afterward.

Gold Price: Daily chart

Trend: Further upside expected