Gold Price Strengthens Amid Mounting Concerns for the US Economy

Posted Wednesday, May 3, 2023 by
Arslan Butt • 1 min read

The GOLD price is gaining momentum and is expected to break above the immediate resistance level of $2,020.00 during the Asian session. This bullish trajectory is fueled by concerns over the US economy, particularly after the US Treasury Secretary’s announcement that the Treasury will run out of funds in early June if the administration fails to raise the debt ceiling.

Although US President Joe Biden is currently declining negotiations with US House of Senate Joseph McCarthy on spending cuts, concerns about the US economy’s ability to make payments could force him to come to the table for debt ceiling talks. An extension of the US debt ceiling could result in a downgrade of the US long-term outlook, which would negatively impact the US Dollar, Treasury yields, and S&P500, but increase the appeal of GOLD as a safe-haven asset.

Although S&P500 futures have shown moderate gains in Asia, the overall market mood is still risk-off. The US Dollar Index (DXY) has also decreased sharply, and is expected to continue falling ahead of the Federal Reserve (Fed) policy.

GOLD technical analysis indicates a breakout of the Symmetrical Triangle chart pattern, resulting in wider ticks and heavy volume. The yellow metal is heading towards the horizontal resistance level plotted from April 13th’s high at $2,048.75, while the advancing 20-period Exponential Moving Average (EMA) at $1,996.47 is likely to provide support for Gold bulls.

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