Gold Price Forecast: XAU/USD testing bullish commitments, will 21 DMA hold?

• Gold price finds buyers again at 21-Daily Moving Average of $1,916 as the US Dollar corrects.
• BoJ’s Ueda-led USD/JPY sell-off weighs on the US Dollar, despite a cautious mood and higher US Treasury bond yields.
• Gold price looks to retest the 50-Daily Moving Average, although upside appears shortlived amid bearish RSI.

Gold price is bouncing back toward the $1,930 round figure, having found fresh demand again near the $1,915 region. Gold price is capitalizing on a renewed correction in the United States Dollar (USD) despite a mixed market mood and a rally in the US Treasury bond yields.

Gold price shines as US Dollar wilts

As the critical US Consumer Price Index (CPI) inflation week kicks in, investors are trading cautiously, taking cues from a modestly flat close on Wall Street last Friday. The rebound in  Apple Inc. was offset by a dismal performance in Nvidia Corp. and Tesla Inc., contributing to a sluggish end to the week.

In Monday’s trading, risk sentiment remains tepid following the surprisingly hawkish remarks from the Bank of Japan (BoJ) Governor Kazuo Ueda delivered over the weekend. However, the safe-haven US Dollar fails to cheer a cautious market mood, as it bears the brunt of a big figure sell-off in the USD/JPY pair. Ueda said over the weekend that the central bank’s focus will now be “a quiet exit” from the ultra-loose monetary policy, which triggered a massive surge in the Japanese Yen.

Further, the US Dollar also ignored rallying US Treasury bond yields on optimism surrounding a soft landing for the United States economy. While returning from the G20 Summit on Sunday, US Treasury Secretary Janet Yellen said she feels “increasingly confident about a soft landing for the US economy.”

Gold price is benefiting from a broad-based US Dollar decline early Monday, rebounding from near one-week lows of $1,915. However, a further upside in Gold prices appears elusive amid an upswing in the US Treasury bond yields. Additionally, China’s slowing CPI and deflation in the factory gate inflation could also put Gold buyers on a cautious footing. China’s CPI rose 0.1% in August from a year earlier, reversing course slightly from a fall of 0.3% in July, according to data published on Saturday by the National Bureau of Statistics (NBS).

Later in the day, the Gold price action will remain at the hands of risk sentiment and the US Dollar dynamics, as the US economic docket remains data-dry at the start of the week on Monday while the US Federal Reserve (Fed) has entered its ‘blackout period’ ahead of next week’s policy meeting.

Gold price technical analysis: Daily chart

From a short-term technical perspective, Gold price will likely remain confined between the horizontal 21- and 50-daily Moving Averages (DMA) at $1,916 and $1,932 in the lead-up to the US CPI showdown.

The 14-day Relative Strength Index (RSI) is inching higher but remains just beneath the midline, having breached the latter last Friday.

Therefore, risks appear titled to the downside for Gold price. But Gold sellers need to crack the 21 DMA support at $1,916 on a daily closing basis.

A sustained drop below that level will challenge the $1,900 threshold, below which a sell-off toward $1,885 will be inevitable.

On the flip side, the immediate resistance is seen at the  50 DMA of $1,932, above which the 100 DMA hurdle at $1,950 will be tested.

The static resistance of $1,970 and the July 27 high of $1,982 will be next on the radar for Gold buyers.