Gold Price Forecast: XAUUSD treads water around $1.840 amid sluggish USD, light trading

• Gold Price erases recovery gains after bulls run into the 21 DMA barricade.
• US dollar starts the week on the back foot amid a better risk environment.
• America observes the Juneteenth holiday, leaving XAUUSD in limbo.

Gold Price is trading modestly flat around $1,840, reversing the rebound seen in the Asian session. The recovery in risk sentiment is boding ill for the safe-haven US dollar, in turn, capping the downside in the bright metal.

Thinner liquidity conditions on account of the Juneteenth holiday in the US also leave the dollar bulls at bay, helping the metal find a floor.

The upside in XAUUSD, however, remains capped, as investors remain wary amid the aggressive Fed’s tightening path. The Fed hiked the key policy rates by 75 bps last week while leaving doors open for a 75 bps increase in July, as the world’s central bank remains committed to fighting inflation.

Meanwhile, gold price also lacks the follow-through recovery momentum, as the US inflation expectations, as per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, hit fresh monthly lows below 2.60%. The yellow metal is often considered a hedge against inflation.

Markets now remain focused on the testimony from ECB President Christine Lagarde for fresh hints on the monetary policy, which could have a significant impact on risk sentiment, which may affect gold dynamics. Next of note for the metal remains Fed Chair Jerome Powell’s testimony due later this week.

Gold Price: Daily chart

Gold bulls failed to resist above the key 200-Daily Moving Average (DMA) and 21 DMA at $1,843 and $1,848 respectively so far this Monday.

 If bulls manage to find acceptance above the latter, then the $1,850 psychological mark will be challenged.  Up next, the recent rage highs near $1,858 will test the bearish commitments if bulls manage to flex their muscles.  

Also read: Gold Price Forecast: XAUUSD to extend struggle around 200 DMA, with all eyes on Powell

The 14-day Relative Strength Index (RSI) remains listless below the midline, suggesting that the upside attempts are likely to have limited legs.

On the downside, the immediate support is likely to emerge at Friday’s low of $1,834, below which XAU bears will aim for the $1,830 round figure.

Gold Price: Additional levels to consider