Gold Price Forecast: XAUUSD drops toward $1710 as market sentiment deteriorates

• Gold turns negative as market sentiment deteriorates.
• XAU/USD slides below $1720, rejected again from above $1730.
• US Dollar recovers momentum, erases losses.

Gold prices failed to hold to gains on Monday, hit after Gazprom’s announcement that will slow flows on the Nord Stream 1 pipeline, triggering a decline in equity prices. XAUUSD printed a fresh daily low at $1714 during the American session.

Earlier on Monday, gold peaked at $1736, slightly below last week high and then lost momentum. It failed to hold above $1730 and then accelerated the decline after the US Dollar gained strength.

Gazprom’s announcement weighed in stocks and pushed energy prices to the upside. The dollar erased losses and turned positive. The DXY rose back above 106.50.

Market participants await the outcome of the FOMC meeting that will start on Tuesday. “We expect the FOMC to follow up June's large 75bp rate increase with a similar move in July, lifting the target range for the Fed Funds rate to 2.25%-2.50%. In doing so, the Committee would bring the policy stance to its estimate of the longer-run neutral level. We also look for Chair Powell to retain optionality by leaving the door open to additional 75bp rate increases”, explained an analyst at TD Securities.

Gold finds resistance

Last week, gold prices posted the first weekly gains after falling during five in a row. The rebound from the critical support area of 1675$ (2021 lows) found resistance at $1740.

From a very short-term perspective, XAUUSD is correcting lower and is testing the $1715 area. A break lower could open the doors to $1700. If it rises back above $1725, another test of $1740 could take place. The key resistance above is at $1750.

Technical levels