Gold Price Forecast: XAU/USD hovers around $2,610 in quiet pre-holiday trading

XAU/USD Current price: $2,612.01

• Disappointing United States data further undermined the market’s mood.
• Financial markets move in slow motion ahead of the Christmas holidays.
• XAU/USD is poised to extend its slide below $2,600 amid renewed USD demand.

Spot Gold trades with a soft tone on Monday, although it's holding above $2,600 a troy ounce. The bright metal peaked early in Asia at $2,633.14 amid the broad US Dollar’s weakness, later easing on a souring mood backing demand for the American currency. Action, however, remains limited as investors gear up for the winter holidays. Most major markets will be closed in the upcoming days amid the Christmas celebration.

The poor performance of Wall Street is adding to the US Dollar's strength. Following some solid advances on Friday, the three major United States (US) indexes trade with a soft tone, with only the Nasdaq Composite posting a modest advance. An uptick in government bond yields further supports the Greenback. The 10-year Treasury note currently yields 4.56%, up roughly 4 basis points (bps).

Meanwhile, the US anticipated some macroeconomic releases scheduled for Tuesday as President Joe Biden issued an executive order closing the federal government on December 24. Durable Goods Orders fell 1.1% in November, worse than the 0.4% decline expected. Additionally, CB Consumer Confidence edged sharply lower in December, falling to 104.7 from 112.8 in November and missing the expected 112.9.

XAU/USD short-term technical outlook

From a technical point of view, XAU/USD could extend its slide in the upcoming sessions. The daily chart shows that it is pressuring its low and a bullish 100 Simple Moving Average (SMA), trading around the latter for the first time since last February. The 20 SMA, in the meantime, have lost its directional strength above the current level, suggesting selling pressure remains. Finally, technical indicators head south within negative levels, although without a strong momentum. The pair may extend its slump should the near-term slide extend below $2,600.

The 4-hour chart shows XAU/USD has fallen below the 100 and 200 SMAs while it is currently battling around a bearish 20 SMA. At the same time, technical indicators are piercing their midlines with firmly downward slopes, albeit still near neutral levels.  

Support levels: 2,604.20 2,591.70 2,582.90  

Resistance levels: 2,617.55 2,632.00 2,645.20