Gold Price Forecast: On its way to challenging the $1,800 threshold

XAUUSD Current price: $1,811.93

• Demand for the greenback amid risk aversion returned with Wall Street’s opening.
• The yield on the 10-year US Treasury note soared to its highest in almost 20 years.
• XAUUSD is technically bearish and poised to lose the $1,800 mark.

Spot gold remains under pressure on Tuesday, trading around $1,811 a troy ounce after bottoming at $1,807.87 during Asian trading hours. Market concerns rotate around a possible US stagflation, that is, high inflation levels coupled with an economic recession. On Monday, the Wall Street Journal reported rumors that US Federal Reserve officials were considering hiking rates by 75 bps after inflation reached a record high in May.

Demand for the greenback paused at the beginning of the day but resumed after Wall Street’s opening, as the focus remains on inflation and Fed’s actions to control it. The US reported the May Producer Price Index, which increased by 10.8% YoY, slightly below the previous 10.9%.

The news exacerbated the selling spiral around equities while it put US government bond yields under the spotlight. The 10-year Treasury note is currently yielding 3.44%, not far from a fresh multi-year high of 3.456%. Stocks, on the other hand, resumed their slides, with only the Nasdaq Composite struggling to retain the green.

Gold Price short-term technical outlook

XAUUSD is poised to extend its slump, according to the daily chart. It is posting a fourth consecutive lower low while extending the slide below its moving averages. Technical indicators, in the meantime, remain within negative levels with modest bearish slopes.

In the near term, and according to the 4-hour chart, the decline could continue as the 20 SMA accelerates south below the longer ones, all of them well above the current level. At the same time, technical indicators head firmly lower near oversold readings, without signs of downward exhaustion.

Support levels: 1,807.85 1,798.00 1,789.40

Resistance levels: 1,825.35 1,836.90 1,844.45  

View Live Chart for the XAU/USD