Gold Price Forecast: XAU/USD retraces amidst surprising US economic data

• Positive US durable goods orders and consumer confidence data dampen Gold’s appeal.
• Surge in new home sales and climbing treasury yields add to Gold’s woes.
• Market participants closely monitor Fed Chair Powell’s upcoming remarks.

Gold price retreats after hitting a daily high of $1930.66 due to overall upbeat data from the United States (US), which portrays the economy’s resilience, despite higher borrowing costs set by the US Federal Reserve (Fed). US Treasury bond yields edge up a headwind for the yellow metal. The XAU/USD is trading at $1919, with losses of 0.18%.

XAU/USD under pressure as US and US Treasury yields surge

XAU/USD remains under pressure as market sentiment shifts positively. Durable Good Orders in the US surprised market participants by rising 1.7% MoM in May, above estimates of a -1% plunge, and 0.5% above April’s 1.2% data. Data eases fears for a hard landing in the US, as witnessed by Gold prices sliding, which is usually sought as a safe-haven asset in times of global economic slowdown.

In additional data, excluding transports, orders climbed 0.6%, above estimates for a -0.1% contraction, and topped April’s -0.6% fall.

The Conference Board (CB) recently revealed that Consumer Confidence in June improved to 109.7, crushing estimates of 104 and above May’s 10.5 figures. Comments made by Dana Peterson, Chief Economist at the Conference Board,  showed that Americans’ mood is positive regarding finding a job, even though income expectations shrank slightly; at the same time, consumers see a decline in inflation ahead.

In other data, US New Home Sales advanced in May to their fastest rhythm in over one year, bolstering the US Dollar (USD), which continued to strengthen against precious metals prices. New Home Sales jumped 12.2% MoM vs. 3.5% in April and were at a seasonally adjusted annualized rate of 763K homes, as the US Department of Commerce revealed.

Meanwhile, the US Dollar Index (DXY), which tracks the buck’s value against a basket of peers, drops 0.20%, at 102.552; but US Treasury bond yields advance. The US 10-year Treasury note yields 3.772%, gains 4.2 basis points, and underpins US real yields from Monday’s close of 1.54%, to 1.592%, a headwind for XAU/USD.

Given the backdrop, and with the US Federal Reserve (Fed) Chair Jerome Powell speaking at the European Central Bank (ECB) Sintra event, it would likely keep XAU/USD’s prices within a narrow range as traders dissect Powell’s comments. Of late, the Fed Chair remained neutral to hawkish, though it has repeated that two more rate hikes are on the table, even though the CME FedWatch Tool shows market participants do not believe the Fed will raise rates past the 5.25%-5.50% range.

XAU/USD Price Analysis: Technical outlook

XAU/USD remains neutral-to-downward biased after a bearish cross happened on June 7, with the 20-day Exponential Moving Average (EMA) dropping below the 50-day EMA. At the time of writing, the 20-day EMA is closing the distance related to the 100-day EMA, which sits at $1937.88 and acts as strong dynamic support, with XAU’s buyers unable to crack the level. If XAU/USD extends its losses past $1900, the next support level will be the 200-day EMA at $1895.65. A breach of the latter and XAU/USD could slide towards the next swing low, the March 8 daily low of $1809.48.