Gold Price Forecast: XAU/USD stays defensive around $1,940 as bulls seek confirmation of dovish Fed bias

• Gold Price remains sidelined at three-week high, prods two-day uptrend.
• Mixed concerns about China, cautious mood ahead of top-tier US data and sluggish yields test XAU/USD bulls.
• Clear upside break of 200-SMA, dovish Fed bias keep Gold buyers hopeful.
• Softer US employment, inflation concerns will allow the Gold Price to challenge monthly high.

Gold Price (XAU/USD) lacks upside momentum at the highest level in three weeks, making around to $1,937-38 of late, as traders seek more clues to confirm the dovish bias about the US Federal Reserve (Fed) that gained momentum after the previous day’s downbeat US data. Also challenging the XAU/USD bulls could be the mixed concerns about the US-China ties and the sluggish US Treasury bond yields.

The cautious mood ahead of the US ADP Employment Change, the final readings of the US second quarter (Q2) Gross Domestic Product (GDP) and the Personal Consumption Expenditure (PCE) seem to prod the Gold buyers at the multi-day high. That said, the previous day’s disappointing US consumer confidence, employment and housing data flagged fears of the Fed’s policy pivot, especially after Fed Chair Jerome Powell highlighted the data-dependency for future moves to defend the hawkish bias.

Elsewhere, China’s dislike for the US Commerce Secretary Gina Raimondo’s complaints about the hardships for the US firms in China prods the Gold buyers. On the same line could be the International Monetary Fund’s (IMF) readiness to be more cautious while allocating the Special Drawing Rights (SDRs) in the future, due to the current environment of higher interest rates and inflation.

Amid these plays, S&P 500 Futures struggle to extend the three-day uptrend while the US Dollar Index (DXY) remains sidelined around 103.55 after falling the most in six weeks. That said, the US Treasury bond yields remain sidelined at a two-week low.

Looking forward, the US data and China headlines will be crucial for clear directions as XAU/USD bulls appear running out of steam.

Gold Price Technical Analysis

Gold Price struggles to justify the clear upside break of a monthly horizontal resistance, now support, as well as the 200-SMA, amid the overbought RSI (14) line.

Also challenging the XAU/USD bulls is the 50% Fibonacci retracement of its July-August fall, around $1,836.

In a case where the Gold Price remains firmer past the 200-SMA and the previously stated resistance-turned-support area, as well as ignore the overbought RSI, the XAU/USD bulls can challenge the 61.8% Fibonacci ratio of around $1,948.

However, a downward-sloping resistance line from July 20, close to $1,958 at the latest, will challenge the Gold buyers afterward.

Meanwhile, a clear downside break of the aforementioned key moving average and the support zone, respectively near $1,933 and $1,932–30, could recall the Gold sellers.

Even so, an ascending trend line from August 31, near $1,817 by the press time, can challenge the XAU/USD bears before giving them control.

Overall, the Gold Price remains on the bull’s radar unless it breaks the $1,817 support.

Gold Price: Four-hour chart

Trend: Further upside expected