The gold price is maintaining the earlier comeback at $2,020 early Tuesday, having started the week on a positive note. The US Dollar (USD) is licking its wounds after falling precipitously from five-week highs on Monday.
All eyes are on US retail sales and the debt ceiling meeting.
Risk sentiment improved on Monday, causing the US Dollar Index to drop from a one-month high. As investors took heart from US President Joe Biden’s comments over the weekend that discussions with Congress. On expanding the US government’s debt ceiling were progressing.
The renewed optimism around the US debt ceiling crisis has crushed the safe-haven US Dollar across the board, driving the gold price to mount a recovery towards the round $2,030 mark. On Tuesday, US President Biden will meet with congressional leaders to discuss a plan to raise the nation’s debt ceiling and avert a catastrophic default.
Prior to the meeting, gold traders will be looking forward to the US Retail Sales data, which is expected to indicate that the headline number rose 0.7% MoM in April after falling for two consecutive months. Strong US statistics might signal easing economic fears, adding to the US Dollar’s continued decline.
On the other side, if the data comes in below expectations and rekindles recession fears, the gold price may suffer, resurrecting the Greenback’s safe-haven allure.
However, the US debt ceiling discussions will receive greater attention, particularly since Republican House of Representatives Speaker Paul Ryan resigned.
Gold Technical Outlook
Gold price rose off the flattish 21-Daily Moving Average (DMA) around $2,009 on Monday, signalling upward risks to Gold purchasers, as shown on the daily chart.
The 14-day Relative Strength Index (RSI) remains above 50, lending support to the bullish case.
However, gold purchasers must find acceptance above the falling trendline resistance around $2,020, after which the $2,030 round number would be the next significant hurdle.
Further north, Thursday’s high of $2,041 will be difficult for Gold bulls to overcome.
Daily closes below the 21 DMA support, on the other hand, will restart the decline towards the $2,000 psychological barrier.
The next meaningful downside support is seen around $1,977, where the bullish 50 DMA and the May 1 low meet.
