Gold Price Forecast: XAU/USD extends slide below $2,320 as USD demand persists

XAU/USD Current price: $2,319.23

• Mixed comments from Federal Reserve officials and Canadian inflation dented the market mood.
• Consumer Sentiment in the US contracted by less than anticipated in June.
• XAU/USD under pressure, bears aiming to pressure the $2,300 threshold.

Gold traded lifeless throughout the first half of Tuesday, confined to a tight range just below the $2,330 mark, further sliding after Wall Street’s opening. US indexes trade mixed, with the Dow Jones Industrial Average heading south but the S&P500 and the Nasdaq Composite posting gains. The focus is on NVIDIA as the AI chipmaker finally found the strength to bounce following a three-day slump. In the absence of relevant news, the focus remained on the tech sector.

At the same time, investors are assessing inflation figures and Federal Reserve (Fed) speakers. On the one hand, Canada reported that the Consumer Price Index (CPI) rose by 2.9% YoY in May, higher than the 2.9% posted in April and above the 2.6% forecast. Furthermore, the Bank of Canada's (BOC) core CPI saw a yearly increase of 1.8%, up from the 1.6% growth previously recorded. The news spurred concerns about persistent inflationary pressures and reminded speculative interest of the risks of trimming interest rates too early.

Meanwhile, Fed Governor Michelle Bowman said the Fed is not yet at the point where it is appropriate to cut rates. Even further, Bowman expressed willingness to raise rates if inflation stalls. Finally, she added that the labor market remains tight and only saw modest progress on inflation this year. Also, Governor Lisa Cook noted that the central bank is on track for a rate cut if the economy’s performance meets her expectations, but she was unable to anticipate when. Cook was far more optimistic than Bowman about future rate cuts, limiting US Dollar strength mid-US afternoon.

Finally, Consumer sentiment in the US kept sliding in June, as the Conference Board's Consumer Confidence Index declined to 100.4 from 101.3 (revised from 102.00) in May. The reading, however, beat the 100.0 expected.

XAU/USD short-term technical outlook

XAU/USD trades around $2,320, and the daily chart suggests it may maintain the downward bias. The pair is finding sellers around a flat 20 Simple Moving Average (SMA) for a second consecutive day while still holding above bullish 100 and 200 SMAs. However, technical indicators gain bearish momentum within negative levels, in line with an extended slide, particularly on a break below $2,306.45, the immediate support level.

The bearish case is firmer in the near term. XAU/USD accelerates south below all its moving averages, which anyway remain directionless. The 20 SMA slowly grinds lower, although between the longer ones, not enough to confirm additional selling interest. Nevertheless, technical indicators head firmly south within negative levels, reflecting persistent selling interest.

Support levels: 2,306.45 2,295.20 2,279.60

Resistance levels: 2,334.10 2,346.70 2,360.30