Gold Price Forecast: XAUUSD barely slides below $1720, ahead of the FOMC decision
- Gold price remains in choppy trading conditions as investors await Fed’s 75 bps rate hike.
- US corporate earnings weigh on mood as they complain about inflation as the main reason for cutting or missing profits.
- Gold Price Forecast (XAUUSD): Downward biased but will remain sideways ahead of the FOMC meeting.
Gold price turned negative during the day, after hitting a daily high at around $1728, but so far slid amidst downbeat investors’ market mood as they brace for the July FOMC monetary policy meeting. At the time of writing, XAUUSD is trading at $1718.46, down 0.05%.
US companies complain about inflation and a higher US dollar, headwinds for gold
Several factors, like Walmart cutting its profit outlook, blamed on double-digit food prices and elevated energy prices, and the IMF cut its global growth outlook for 2022 and 2023, weighed on sentiment. Also, EU countries agreed to reduce their gas use by 15%, alongside reduced gas flows in the Nord Stream 1 pipeline, adding fuel to the already battered mood. Traders seeking safety propelled the greenback higher. The US Dollar Index, a gauge of the buck’s value vs. a basket of its peers, gains 0.54%, up at 107.060.
Global bond yields followed suit, edged higher, but pared some gains. The US 10-year benchmark note drops three bps and sits at 2.761%. Worth noting that the yield curve inversion between 2s and 10s had further deepened towards -0.253%. However, the US 3-month 10-year yield curve has bear flattened to 0.228%, about to flag recession.
In the meantime, a light US economic calendar ahead of Chair Powell and Co. meeting witnessed the release of the CB Consumer Confidence, which dropped to its lowest level since February 2021. Lyn Franco, senior director of economic indicators at the Conference Board, said American “Concerns about inflation -- rising gas and food prices, in particular -- continued to weigh on consumers.” Furthermore, she added, “looking ahead, inflation and additional rate hikes are likely to continue posing strong headwinds for consumer spending and economic growth over the next six months.”
At the same time, the S&P/Case-Shiller Home Price YoY for May missed expectation by 0.5%, while the US House Price Index for May, trailed April’s reading to 18.3%, lower than the 18.9%.
What to watch
On Wednesday, the US economic docket will feature the Durable Good Orders, Retail Inventories, and Pending Home Sales ahead of the FOMC monetary policy decision.
Gold Price Forecast (XAUUSD): Technical outlook
Gold price remains downward biased, despite holding above the $1700 price level. The daily EMAs above the spot price, and buyers failing to reclaim the May 16 low-turned-resistance at $1787.03, would keep the bias intact. Additionally, the Relative Strength Index (RSI) at 35.80 but aiming lower suggest the yellow metal price is skewed to the downside.
Upwards, a break above the 20-day EMA at $1741.87 would open the door for challenging $1750. On the flip side, a break below $1700 would send the precious metal towards $1681.
