• Gold price slips below $2,300 as fears of widening Middle East conflict wane.
• The US Dollar’s appeal improves on a strong US economic outlook.
• The Fed supports keeping interest rates higher until there is confidence that inflation will return to 2%.

Gold price (XAU/USD) extends its downside for a second consecutive day, trading slightly below the crucial support of $2,300 in Tuesday’s European session. The precious metal shifts into bearish territory as investors shrug off Middle East fears amid hopes that the conflict between Iran and Israel will not escalate further. This has improved investors’  risk appetite while safe-haven demand has waned.

The outlook of Gold turns vulnerable as an improved appeal for the US Dollar negatively impacts the dollar-denominated commodity. Investment banking firm Goldman Sachs said: “As we move into the second quarter, ongoing upgrades to already-robust US growth forecasts give the FOMC the luxury of a later and more gradual policy adjustment.” The US Dollar Index (DXY), which tracks the US Dollar’s value against six major currencies, hovers near 106.00.

Meanwhile, 10-year US Treasury yields trade sideways around 4.62% as the focus shifts to the US core Personal Consumption Expenditure Price Index (PCE) data for March, which will be published on Friday. The inflation data will provide cues about the Federal Reserve’s (Fed) guidance on interest rates in the May policy meeting, in which policymakers are widely anticipated to keep them unchanged in the range of 5.25%-5.50%. The Fed’s preference for keeping interest rates higher bodes well for the US bond yields and weighs on Gold