Gold price outlook: XAUUSD hovers at two-week lows $1,990 despite a higher US Dollar. Worries around the US debt ceiling provide some backing
Gold Key Discussion Points
The price of gold is hovering at a 2-week low on Wednesday due to persistent US Dollar purchasing.
Hawkish central bank predictions help to limit the XAUUSD’s gain potential.
Concerns over the US debt ceiling provide a little assistance and, for the time being, serve to prevent additional losses.
The price of gold has entered a negative holding phase – And is now trading slightly above a 2 week low. The XAUUSD is now trading around the $1,987-$1,988 range. Down little than 0.10% on the day, and has been on the back foot during the initial half of the European session.
A stronger US dollar is a hindrance to the price of gold.
The US Dollar rises to a nearly 2-month high and experiences strong momentum for the second straight day. It shows out to be a significant influence lowering the price of gold. Recent aggressive remarks from a number of (Fed) members rebuffed predictions of interest rate decreases later this year. In reality, The Cleveland Fed President Loretta Mester stated on Tuesday that the US Fed hasn’t yet been in a position to maintain rates since interest rates have not stabilized at a level that is adequately prohibitive.
Hawkish predictions for the US central bank help to limit XAUUSD.
Austan Goolsbee, president of the Chicago Fed, said separately that it was premature to talk about interest rate reductions. Raphael Bostic, president of the Atlanta Federal Reserve, also said that even if the rate of joblessness increases during the course of the year. The central bank will have to battle inflation with all its might. This is coupled with increased market projections that the Fed would maintain higher interest rates for a longer time. This is to consider as another variable working against the price of non-yielding gold. These developments follow an increase in consumer inflation expectations.
Concerns over the US debt ceiling help to support the price of gold.
Nevertheless, the CME FedWatch program predicts a higher likelihood that the Fed will keep interest rates unchanged in June. This gives some support and assists, at least temporarily, limit the downside – Along with a deadlock to boost the federal government’s borrowing ceiling. Speaking to the media, Speaker of the House Kevin McCarthy said that both sides remained very far off. Republican lawmakers and US President Joe Biden have both voiced guarded confidence that a deal to lift the US debt ceiling is close to being reached.
Technical prognosis for gold prices
Technically speaking, some more selling under the $1,980 area will reveal the next significant support close to the $1,970 mark. Gold’s price will be sensitive to extending its current correction drop from the all-time top. Which is located close to $2,078-$2,079 region hit earlier in the month. If there is a clear breach under the latter band. The XAUUSD might then proceed to decline toward hitting the 100-day Simple Moving Average (SMA). Which is now located near $1,925. There is some interim support located close to $1,950-$1,948 zone.
On the other hand, the psychological threshold of $2,000 now appears to serve as a barrier right away. Any further increase may draw further selling and be restrained close to the $2,020-$2,021 barrier. Nevertheless, some follow-through purchasing might push the price of gold to an area between $2,035 and $2,040. The XAUUSD should be able to regain its record high and maintain its upward trend as it advances toward breaking past the $2,100 round-figure barrier.
