Gold Price Forecast: XAU/USD shifts above $1,840 as DXY loses appeal on lower PMI forecasts

• Gold price has scaled above $1,845.00 firmly as DXY weakens on lower estimates for the US PMI.
• The US Services PMI is seen significantly lower at 49.1 vs. 53.2 reported earlier.
• Investors should brace for a consecutive 75 bps rate hike by the Fed in July.

Gold price (XAU/USD) has displayed a firmer rebound above $1,835.00 in the Asian session after sensing a selling pressure at the open. The precious metal has witnessed a strong rally which has pushed the gold prices above $1,845.00. Considering the bullish momentum after a rebound, the bright metal is expected to kiss the round-level resistance of $1,850.00.

The gold prices are performing well amid weakness in the US dollar index (DXY). The DXY has tumbled to near 104.37 and is expected to find more offers on lower guidance for the Purchase Managers Index (PMI) data. The Composite PMI is seen higher marginally to 53.5 from the prior print of 53.4. The Manufacturing and Services PMIs dictate a severe underperformance. The Services PMI is seen extremely lower at 49.1 against the prior print of 53.2. While the Manufacturing PMI is expected to slip to 54.7 from the former figure of 55.7.

Apart from that, the odds of a consecutive rate hike by 75 basis points (bps) have been bolstered. Fed Governor Christopher Waller has stated, If the data comes in as I expect, I will support a similar-sized move at our July meeting,"

Gold technical analysis

On an hourly scale, the gold price has moved back above the 50% Fibonacci retracement (which is placed from June 12 high at $1,879.26 to June 14 low to $1,805.11) at $1,842.02. The 20- and 50-period Exponential Moving Averages (EMAs) at $1,841.54 and $1,839.76 respectively are expected to display a bearish crossover, which will strengthen the gold bears. Also, the Relative Strength Index (RSI) (14) has rebounded strongly after taking support from 40.00.

Gold hourly chart