Gold Price Forecast: XAU/USD struggle extends above $2,300, with Fedspeak on tap

• Gold price reverses Monday’s rebound as sentiment remains upbeat early Tuesday. 
• The US Dollar keeps losses amid sluggish US Treasury bond yields, dovish Fed commentary.
• The path of least resistance appears down for the Gold price even after the triangle breakout.
• The daily RSI stays below 50, all eyes turn to more Fedspeak and mid-tier US data.

Gold price is reversing a part of Monday’s rebound, as sellers fight back early Tuesday amid a risk-on market profile. The US Dollar (USD) nurses losses alongside the US Treasury bond yields, undermined by the dovish commentaries from Federal Reserve (Fed) policymakers.

Gold price awaits more Fedspeak for fresh policy cues

Speaking in a CNBC interview on Monday, Chicago Fed President Austan Goolsbee said that the Fed's monetary policy is restrictive while adding that slowing inflation data would open the door to an easier policy. San Francisco Fed President Mary Daly noted that “recent inflation readings are more encouraging, but it's hard to know if we're on track to sustainable price stability.”

The return of risk flows also weighed down the US dollar, which sent Wall Street higher. Dow Jones rallied to a one-month high even as Nasdaq tumbled over 1%. Broader portfolio rebalancing helped lift the broader market sentiment, helping Gold price recover some ground at the expense of the US Dollar.

The Greenback also bore the brunt of position readjustments in the Euro ahead of the French election on Sunday, which lifted the EUR/USD pair from six-day lows near 0.6670. Gold price, therefore, defied the bearish odds and rose back to near $2,335.

However, Gold sellers continue to lurk at that level, fuelling a renewed downside so far this Tuesday. Despite the sustained US Dollar weakness and negative US Treasury bond yields, Gold price has turned on the back foot, as traders eagerly await Friday’s US inflation data for fresh clues on how soon the Fed can cut interest rates.

Big banks are pushing back their expectations for a Fed rate cut to December from September, weighing negatively on the non-interest-bearing Gold price. Markets, however, continue pricing in about a 68% chance of a Fed rate cut in September, according to CME FedWatch Tool.

Concerns over China’s economic recovery also dent the appeal of Gold price. China is the world’s top Gold consumer.

Investors now look forward to comments from Fed officials set to speak later this Tuesday, including Fed Governors Lisa Cook and Michelle Bowman. Besides, the US Conference Board Consumer Confidence data will also entertain Gold traders.

Meanwhile, the half-year-end flows could also remain in play, significantly affecting the Gold price movement.

Gold price technical analysis: Daily chart

 

Gold price continues to hold the symmetrical triangle pattern confirmed last week, having bounced off the triangle support, then at $2,317, on Monday.

However, sellers have returned to retest that level, as the 14-day Relative Strength Index (RSI) sits beneath the 50 level.

Also, the 21-day Simple Moving Average (SMA) and the 50-day SMA bearish crossover continues to exert bearish pressures on the Gold price.

A daily candlestick close below the triangle support line, now at $2,320, would confirm the pattern failure, reinforcing selling interests.  

If sellers flex their muscles then the initial demand area is seen at the $2,310 round level. The next relevant support is seen at the $2,300 threshold.

Acceptance below the latter will put the May 3 low at $2,277 back in the spotlight.

On the other hand, Gold price needs to recapture the confluence zone near $2,335, where the 21-day SMA and the 50-day SMA close in.

Further up, the two-week high of $2,366 will be challenged, as buyers aim for the June 7 high of $2,388.