The gold price has dropped to roughly $2,040.00 after reaching a new all-time high of $2,079.76.
In the Asian session, gold prices fell dramatically to about $2,040.00 after reaching all-time highs of $2,079.76. After substantial increases spurred by revised language on interest rate guidance from the Federal Reserve (Fed). After rising crucial rates by successive 25 basis points (bps) to 5.00-5.25%. The precious metal has quickly retreated as profit-booking stepped in.
The USD Index is attempting to maintain its immediate support level of 101.07, but the downside appears to be favored due to a variety of headwinds. Concerns about US banking have been rekindled when Bloomberg reported that PacWest Bancorp is examining strategic options, including a possible sale.
US President Joe Biden is not interested in lifting the debt ceiling at the expense of the President’s expenditure objectives.
While concerns about debt ceiling issues are growing, US President Joe Biden is unwilling to raise the debt ceiling in negotiations with Republicans at the expense of The President’s expenditure plans.
Meanwhile, S&P500 futures have shown some recovery, indicating that the risk-off market mood has improved. Fears over the US debt ceiling have pushed severely on Treasury rates. Ten-year US government bond rates have fallen to around 3.33%.
The USD Index is losing ground as a result of multiple headwinds such as a revived US financial crisis and debt limit difficulties.
Data from the US labor market will be closely monitored in the coming months. The US Nonfarm Payrolls (NFP) report is expected to be 179K lower than the previous release of 236K. The unemployment rate is stable at 3.5%. In addition, average hourly earnings are seen as steady. Consistent labor cost index data may cause the Fed to reconsider a pause in rate hikes, as it may feed inflationary pressures.
Gold Technical Outlook
After a new all-time high of $2,079.76, the gold price has corrected to near $2,040.00. On an four hour chart, the precious metal has filled the gap left by the Fed policy, acting as a cushion.
The 50-period Exponential Moving Average (EMA) around $2,038.56 is also supporting gold bulls. A rise over the 20-period moving average would help gold bulls retake all-time highs.
The Relative Strength Index (RSI) (14) has found support at 40.00 and is expecting a rebound.
