Gold Price Forecast: XAU/USD struggles to defend $1,800 as DXY rebounds ahead of US ISM PMI

• Gold Price remains pressured around the lowest levels in seven weeks after breaking the key support.
• US Dollar regains upside momentum after falling the most in a fortnight as recession woes favor the greenback.
• US ISM Manufacturing PMI for June could direct market moves, Eurozone inflation is important too.

Gold Price (XAU/USD) holds onto the previous day’s bearish bias, despite taking rounds to the multi-day low surrounding $1,805 during Friday’s Asian session.

In doing so, the yellow metal bears the burden of the US dollar rebound ahead of the key US ISM Manufacturing PMI for June, expected 55.0 versus 56.1 prior. Also important is today’s Eurozone inflation gauge, Harmonised Index of Consumer Prices (HICP), likely to refresh the record top to 8.3% versus 8.1% marked previously. In addition to the pre-data anxiety, the US dollar’s latest gains could be linked to the broad recession fears.

That said, the US Dollar Index (DXY) reversed from a 12-day high to snap a two-day uptrend by closing the day around 104.75, near 104.80 by the press time.

The downbeat US personal spending and softer prints of the Fed’s preferred inflation gauge raised concerns over the health of the world’s largest economy and drowned the US dollar on Thursday. The greenback’s previous retreat could also be linked to the downbeat US Treasury yields as the benchmark 10-year bond coupons dropped below 3.0%, before bouncing off to 3.01% at the closing, to portray around 50 basis points (bps) of a fall from June’s peak.

Amid these plays, the S&P 500 Futures remain pressured for the fifth consecutive day around one-week low.

To sum up, Gold Price is likely to witness further downside as the fears of inflation and recession underpin the US dollar’s safe-haven demand, which in turn has inverse relations with the yellow metal. However, today’s US PMI will be important to watch after Thursday’s disappointment from the US data.

Technical analysis

Gold remains on the way to the yearly low surrounding $1,786 as it keeps the previous day’s downside break of the monthly support near $1,807. However, the $1,800 threshold may test the XAU/USD bears.

That said, the 61.8% Fibonacci Expansion (FE) of April-May moves, near $1,748, appears the key level to watch past $1,786.

Alternatively, recovery remains elusive below the support-turned-resistance level of $1,807. 

Gold: Daily chart

Trend: Further weakness expected