Gold Price Forecast: The decline seems more convincing for XAU/USD

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Gold prices build on Tuesday’s drop, hitting a new weekly low near $2,310 in Asian trading on Wednesday. The sustained strength of the US Dollar (USD) along with firmer US Treasury bond yields fuels an additional decline in the price of Gold as traders brace for a light economic calendar in the US later on Wednesday.

Gold prices fall further as the US Dollar regains composure.

The US Dollar followed US Treasury bond yields higher in the second half of Tuesday’s trading, amid hawkish comments from US Federal Reserve (Fed) Governor Michelle Bowman.

In prepared remarks for a speech in London on Tuesday, Bowman said that “If incoming data show that inflation is moving sustainably toward our 2 percent target, it will eventually be appropriate to reduce the federal funds rate gradually to avoid making monetary policy too restrictive.” “However, we are not yet at the point where it is appropriate to reduce the policy rate,” she quickly added.

Meanwhile, Governor Lisa Cook argued that the timing of rate cuts is unclear even though “Inflation has come down and labor market tightness has eased.”

In Wednesday’s session so far, Gold prices are consolidating at weekly lows, awaiting a new batch of top-tier US economic data on Thursday, including the final Gross Domestic Product (GDP) and Durable Goods Orders ahead of Friday’s PCE inflation data, which are of utmost importance.

Technical Analysis of Gold Prices: Daily Chart

Gold prices witnessed the failure of the symmetrical triangle pattern on Tuesday after closing below the triangle support, then at $2,320.

The 14-day Relative Strength Index (RSI) maintains its position below the 50 level, justifying the bearish momentum in Gold prices.

Additionally, the bearish crossover of the 21-day Simple Moving Average (SMA) and the 50-day SMA continues to act as an obstacle. If sellers gain strength, the initial demand area is seen at the $2,300 threshold.

Acceptance below the latter will bring the May 3 low of $2,277 back into focus. On the other hand, Gold prices need to reclaim the 21-day SMA at $2,320 on a daily closing basis to revive the recovery from the monthly low of $2,287.

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