Heat oven to 350 F. Cut raisin bread into 1-inch pieces (about 8 cups). In large bowl, whisk together milk, eggs, sugar, orange peel, nutmeg, orange extract and salt. Toss with raisin bread to mix well.
Butter 2-quart casserole or baking dish. Pour bread mixture into dish. Place in center of deep, ovenproof pan. Pour boiling water into pan until it reaches halfway up sides of dish. Place pan on center rack in oven. Bake until just set, about 40 minutes. Carefully remove from oven.
To serve, sprinkle with confectioners’ sugar. Serve warm.