GOLD PRICE FORECAST: XAU/USD REBOUNDS AT THE 100-DAY SMA FOLLOWING US ECONOMIC DATA

• Gold bears got rejected at the 100-day SMA at $1,940.
• US Service PMIs from ISM and S&P Global came in weak in May.
• US bond yields decline across the board following the disappointing data.

During Monday’s session, Gold price gained bullish momentum and reached the $1,960 level after bottoming at the 100-day Simple Moving Average at the $1,940 zone. This increase was triggered by the release of disappointing ISM Services PMI data for May, which fueled a US Dollar sell-off on the back of failing US bond yields.

US yields decline across the board after disappointing US data

The US Institute for Supply Management (ISM) reported a Service PMI of 50.3 in May, falling short of the expected 51.5 and down from 51.9 the previous month. Furthermore, the S&P Global Composite final estimate for the same month declined to 54.3, lower than the anticipated 54.5, following the previous reading of 55.1. Meanwhile, the final revision of the service sector PMI came in at 54.9, slightly lower than the preliminary reading of 55.1.

Following the release, investors are perceiving a stronger case of a no-hike by the Federal Reserve (Fed) in the June 13-14 meeting. In that sense, the CME FedWatch Tool indicates there is a higher likelihood (77%) of the Fed not raising interest rates in their upcoming June, with expectations of maintaining the target rate at 5.25%.

Those dovish bets on the Fed were reflected in the drop of the US bond yields. The 10-year bond yield is trading at 3.67%, while the 2-year yield stands at 4.50% and the 5-year yield sits at 3.85%. As the US bond rates could be seen as the opportunity cost of holding the non-yielding gold, the yellow metal gained traction