Gold Price Forecast: XAU/USD could test a tough $1,929 with bullish wedge in play

• Gold price holds last week’s gains, as US Dollar revives after subdued US Nonfarm Payrolls data. 
• US Treasury bond yields rebound also checks the upside in Gold price.
• Gold price confirmed a bullish wedge on Friday but recapturing the 21-DMA holds the key.

Gold price treads water just below the $1,930 threshold at the start of the week as bulls take a breather after a solid comeback staged last Friday. The United States Dollar (USD) makes a minor recovery attempt early Monday, tracking the rebound in US Treasury bond yields across the curve after US Nonfarm Payrolls data led to a sharp sell-off.  

US Nonfarm Payrolls revive Gold bulls  

The United States Dollar (USD) came under intense selling pressure and erased weekly gains after the highly-anticipated US labor market report on Friday showed slower-than-expected employment growth in June. The US economy added 209K jobs in June vs. 225K expected and the downwardly revised previous reading of 306K. The wage inflation component in the jobs report rose 4.4% annually, while the Unemployment Rate ticked down to 3.6% in the reported period, as widely expected.

Weak jobs data raised concerns that the United States labor market was loosening, prompting investors to believe that the Federal Reserve (Fed) would be less aggressive in its tightening outlook than previously expected. Markets are already pushing back against expectations of two more Fed rate hikes this year after the likely 25 basis points (bps) rate hike in July. Against this backdrop, the US Dollar Index dropped over a big figure toward the 102.00 level yet again, bumping up Gold price to test the $1,930 round level. Meanwhile, the benchmark 10-year US Treasury bond yields dropped back to the 4.0% key level.

In Monday’s trading, Gold price seems to be gathering pace for the next leg up. However, downbeat Chinese inflation data have rekindled China's economic growth concerns, reviving the US Dollar’s safe-haven appeal. China’s Producer Price Index (PPI) fell for a ninth consecutive month, down 5.4% from a year earlier after a 4.6% drop the previous month. The country’s Consumer Price Index (CPI) was unchanged YoY, compared with the 0.2% gain seen in May, the National Bureau of Statistics (NBS) reported on Monday. Cooling inflationary pressures in the world’s biggest Gold consumer could act as a headwind for the precious metal.

Gold traders could also refrain from placing fresh directional bets ahead of Wednesday’s critical United States CPI data release, which could significantly impact the Fed’s rate hike outlook as well as US Dollar valuations. In the meantime, Fedspeak, broad market sentiment and Fed pricing will continue to influence the Gold price action.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price validated a bullish wedge formation after closing Friday above the descending trendline resistance, then at $1,915.

However, Gold bulls ran into stiff resistance at the bearish 21-Daily Moving Average (DMA) at $1,929, emerging as a tough nut to crack.

A sustained break above the latter is needed to extend the upside break from a falling wedge, opening doors for a test of the downward-sloping 50-DMA at $1,961. Ahead of that, Gold buyers will face a powerful hurdle at the mildly bullish 100-DMA at $1,949.

Note that the 14-day Relative Strength Index (RSI) still remains below the midline, keeping Gold sellers hopeful.

On the downside, the immediate support awaits at wedge resistance-turned-support, now at $1,910. The $1,900 key level will be next on their radars.

Further south, the three-month low of $1,893 could offer some support to Gold optimists.