Gold Prices Correct Lower Amid Stronger US Dollar Index and Uncertainty Over US Debt Ceiling Discussions
During the Asian session, the price of gold (XAU/USD) faced selling pressure as it attempted to surpass the critical resistance of $2,030.00.
During the Asian session, the price of GOLD (XAU/USD) faced selling pressure as it attempted to surpass the critical resistance of $2,030.00. As a result, the precious metal corrected to nearly $2,020.00 and is expected to weaken further due to the US Dollar Index (DXY) showing a strong recovery.
The USD Index has risen above 101.50 due to expectations that stubborn inflation data, after an incremental Nonfarm Payrolls (NFP) report, could lead the Federal Reserve (Fed) to maintain higher interest rates for a longer period. The preliminary report indicates that headline inflation will remain steady at 5.0%, while the core Consumer Price Index (CPI), which excludes oil and food prices, is expected to soften to 5.5% compared to the previous release of 5.6%.
In the meantime, S&P500 futures have faced more losses in Asia. The 500-US stocks basket remained subdued on Monday as investors demand clarity over US debt ceiling discussions. To prevent further delay that could severely damage the US economy, US President Joe Biden has invited some top Republican leaders to approve a debt ceiling raise. Republican House of Representatives Speaker Kevin McCarthy is expected to negotiate heavily on spending initiatives to reduce the deepening budget deficit.
If the US debt ceiling increases, it will inject significant liquidity into the economy and improve the appeal of GOLD as a safe haven.
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