Gold Price Gains Amid US Debt Ceiling Drama and Mixed Fed Comments

Posted Monday, May 22, 2023 by
Arslan Butt • 1 min read

The recent movement in GOLD price (XAU/USD) reflects its response to the United States debt ceiling drama and mixed statements from Federal Reserve (Fed) Chairman Jerome Powell, with key data and events ahead. The rebound in gold price remains uncertain as the US dollar benefits from hawkish Fed expectations, while policymakers aim to avoid a US default. Factors such as an anticipated improvement in the Purchasing Managers’ Index (PMI) and the Fed’s preferred inflation gauge challenge gold’s performance. Amidst the absence of major announcements from US policymakers, market uncertainty surrounding the debt ceiling extension contributes to gold’s safe-haven status. The recent banking crisis and Powell’s comments on inflation pressures and interest rates impact gold’s recovery. Minneapolis Federal Reserve Bank President Neel Kashkari’s interview with the Wall Street Journal also influences gold market expectations.

The gold price faces multiple catalysts, including:

US debt ceiling announcements

Release of the Federal Open Market Committee (FOMC) meeting minutes
PMI readings

Core PCE Price Index

Technical analysis suggests resistance levels and short-term upside limitations for gold price, with potential support and retracement levels to consider. Despite a short-term recovery, GOLD price remains on the bear’s radar unless it surpasses key levels.

Gold prices closed at the level of $1,977.25 last Friday and are currently hovering around that level. The stochastic indicator shows signs of being overbought and has lost its positive momentum. Additionally, the price is facing downward pressure from the EMA50.

Considering these factors, it is likely that the correctional bearish trend will continue, with the next target being $1,945.20 as a negative level. However, if the price manages to break above $1,977.25, it would indicate a shift in the negative scenario and could lead to further gains, potentially reaching $2,016.95.

For today’s trading, the expected range is between the support level of $1,955.00 and the resistance level of $1,990.00.

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