Gold Price Forecast: XAU/USD sellers lurk above 21-DMA on bearish RSI, hawkish Fedspeak

• Gold price stays flattish amid a US Dollar bounce and holiday-thinned trading.
• Hawkish Federal Reserve commentary saves the day for the US Dollar, US Treasury bond yields.
• Gold price reclaims 21-Daily Moving Average on a weekly closing basis but daily RSI stays bearish.  

Gold price trades around a flatline, just above the $1,950 psychological level early Monday, as traders assess the US Federal Reserve (Fed) rate hike prospects amid a US holiday-thinned market condition.

US Dollar shows signs of life, Gold price listless

Gold price is trading listlessly in Monday’s Asian trading having closed the week on a flat note and despite a steep decline in the US Dollar over the week. Gold buyers stay cautious amid a tepid bounce in the US Dollar from monthly lows across its main competitors while its downside appears capped by the pullback in US Treasury bonds yields.

The prevalent risk-off market profile is underpinning the US Dollar recovery. China growth worries resurface after several major global banks lowered China’s GDP forecasts, with Goldman Sachs noting that “the stimulus seen is insufficient to fire up a powerful enough impulse for growth.”

The cautious market tone is boosting demand for US government bonds at the expense of the US Treasury bond yields, keeping Gold price's downside cushioned. However, if risk aversion gathers steam – aggravated by the holiday-thin light trading – Gold price is likely to extend Friday’s reversal from near $1,970.

Further, expectations around the Federal Reserve interest rates outlook and repositioning ahead of Chairman Jerome Powell’s testimonies could influence US Dollar valuations going forward, impacting the precious metal's direction. In the meantime, Gold price is likely to stick to its range play around the $1,950 barrier.

On Friday, Gold price erased early gains and settled modestly flat, helped by a solid comeback in US Treasury yields as well as the US Dollar, following hawkish comments from Federal Reserve policymakers, the first ones after the end of the Fed’s ‘blackout period’.

Federal Reserve Bank of Richmond President Thomas Barkin said he was "comfortable" with further interest-rate increases given that inflation was not yet on an obvious path back to 2%. Meanwhile, Federal Reserve Governor Christopher Waller said at an economics conference in Norway that "inflation is just not moving and that's going to require, probably, some more tightening to try to get that going down." Additionally, the Fed said in its latest monetary policy report to Congress that inflation in key parts of the US service industry "remains elevated and has not shown signs of easing.”

Markets are pricing roughly a 72% probability of a July Fed rate hike, saving the day for US Dollar bulls. Gold traders will stay focused on the Fedspeak, China stimulus expectations and the first top-tier US economic data on Friday, the S&P Global Manufacturing and Services PMIs, for a fresh direction on the Gold price.

Gold price technical analysis: Daily chart

As observed on the daily chart, Gold price closed the week above the critical bearish 21-Daily Moving Average (DMA) at $1,957 for the first time since May 15.

However, Gold buyers remain little convinced, as the 14-day Relative Strength Index (RSI) continues to trend below the midline.

Therefore, a failure to sustain above the 21-DMA resistance-turned-support will open floors for a test of the powerful horizontal 100-DMA support at $1,942.

Ahead of that, the $1,950 psychological level could offer some comfort to Gold buyers. A sustained move below the 100-DMA will challenge Thursday’s low at $1,925.

On the flip side, Gold price needs to survive above the 21-DMA to initiate a fresh rebound toward the previous week’s high at $1,971. Further up, the mildly bearish 50-DMA at $1,985 will come into play.

To conclude, Gold price needs a strong catalyst to break out of the month-old range. Until then, Gold price is likely to witness back-and-forth moves between the 50- and 100-DMAs.