The gold price is mirroring the changes witnessed in Asian trade on Wednesday, making gains towards $2,000 early Thursday. The decline in the US dollar (USD) and US Treasury bond rates boosts the gold price.
The US dollar is holding steady as confidence over the US debt ceiling fades, while gold prices rise.
The US Dollar is retaining some of the previous day’s gains while being on the defensive so far this Thursday. The drop-in US Treasury rates throughout the curve is limiting the US Dollar’s upward potential. Which is helping the gold price stay afloat.
Despite increases in Asian indexes, investors remain cautious. As seen by a small decline in US S&P 500 futures. Markets are still weighing the possibility of a Trump presidency. Default despite recent advances in US debt ceiling discussions.
CNBC News reported early Thursday, citing a draught letter written by senators to US President Joe Biden. “We write to urgently request that you prepare to exercise your authority under the 14th Amendment of the Constitution. Which clearly states: ‘the validity of the public debt of the United States…shall not be questioned.'”
“Using this authority would allow the United States to continue paying its bills. On time and without delay, preventing a global economic disaster,” the letter urged Biden.
On Wednesday, risk sentiment improved and the US Dollar’s upward momentum was capped. As President Biden voiced confidence that the US would not default. While a rebound in regional bank stocks also bolstered the general atmosphere. Western Alliance Bancorp led the regional bank rise a day. After the lender reported a $2 billion increase in deposits in the quarter ended May 12.
The benchmark 10-year Treasury rates rose three basis points to 3.57% in American trading on Wednesday, putting downward pressure on the non-yielding gold price.
Focus on US debt ceiling updates in the midst of mid-tier US data.
Expectations around the US Federal Reserve’s (Fed) interest rate outlook have recently taken a back seat as the market’s focus has shifted to the US debt ceiling issues. The same factors are anticipated to continue driving overall risk sentiment, influencing US Dollar values and gold price movement.
Traders will also be watching the mid-tier United States. States weekly jobless claims and existing home sales statistics, as well as statements by Fed officials.
Gold Technical Outlook
Gold prices fell further on Wednesday, testing the positive 50-Daily Moving Average (DMA) support around $1,982. The gold price, on the other hand, managed to close above the latter, pushing purchasers to mount a rebound early Thursday.
The 14-day Relative Strength Index (RSI) has reversed its downward trend and gone flat, indicating that a gold price comeback is possible.
In that event, gold bulls might attempt Wednesday’s high of $1,993 in order to retake the significant barrier at $2,005, where the flat 21 DMA and the declining trendline resistance intersect.
Acceptance above the latter will start a major rebound in the gold market, with an increase in the price of gold. On the cards is an upsurge towards the $2,020 static resistance.
In contrast, a daily close below the 50 DMA ceiling might lead to a retest of the static support at $1,975.
Gold bears will flex their biceps if the last is broken consistently, setting up additional decline into the psychological threshold of $1,950.
