Gold Price Forecast: XAU/USD Holds Steady as Dollar Strengthens Amid US Markets Close

• Gold price falls amid US markets close and bond yields rise.
• The dollar gains momentum before the possible rise in interest rates by the Fed in July.
• US-China diplomacy advances; US housing index beats expectations.

Gold price is trading with minimal losses amid a quiet US session due to the US holiday. Therefore, with US markets closed, illiquid conditions drive price action. At the time of writing, the XAU/USD pair is trading at $1,952.52 after reaching a daily high of $1,958.73.

Investors focus on real estate data and performance as diplomatic relations between the US and China heat up.

European stocks are trading negative after a week in which three major central banks made monetary policy decisions. The Federal Reserve (Fed) kept rates unchanged, but forecast maximum rates of 5.6%, according to the dot plot of the Summary Economic Projections (SEP). Officials have since signaled the likelihood of raising rates at the July meeting, but the recent rally in US stocks paints a picture that investors are not “buying” for a more hawkish Fed.

Since the US markets remain closed, the performance of last Friday’s session dictates the price of the XAU/USD. The benchmark 10-year bond rate stands at 3.767%, while US real yields, calculated using nominal yield minus inflation expectations, stand at 1.547%, still below the 2023 peak of the 1,719%. If US bond yields continue to rise, XAU/USD is likely to remain under pressure, as high yields often mean a stronger US dollar (USD).

The Dollar Index (DXY), a measure of the value of the dollar against a basket of pairs, rose 0.13% to 102,436.

In events over the weekend, US-China talks resumed as US Secretary of State Anthony Blinken met his counterpart, Chinese Foreign Minister Qin, in Beijing. . Blinken stressed the importance of diplomacy and keeping channels with China open by inviting Qin to Washington. For his part, Qin said China is committed to building a stable, predictable and constructive relationship with the US, while maintaining its stance on Taiwan.

Turning to US data, the June NAHB US Housing Market Index improved from 50 to 55, pulverizing estimates and, according to the report, the highest reading since July 2022. The Informer highlighted robust demand and lack of inventory as the main reasons for the surprising jump.

upcoming events

The US Economic Agenda will reveal additional data on housing, US Federal Reserve Chairman Jerome Powell’s testimony in the US Congress, and some speeches by Fed members , ready to shake up the markets.

XAU/USD Price Analysis: Technical Perspective

The XAU/USD pair is trading sideways, in an area “watched” by the 20 and 100 day EMAs, at $1,959.99 and $1,939.79, respectively. Although XAU/USD broke below a downtrending symmetrical triangle, it reclaimed lost territory and reversed the pattern. However, the XAU/USD pair is trading inside a descending channel, while the RSI and RoC suggest that the sellers are still in command. The first support for XAU/USD would be the 100-day EMA at $1,939.79. A break below would expose other support areas, such as the June 15 low at $1,925.06, ahead of $1,900. On the other hand, the first resistance for XAU/USD would be the 20-day EMA at $1,959.95, closely followed by the 50-day EMA at $1,964.76, before the upper trend line of the descending channel around at $1,970-80.