Yuri Papshev
Independent Analyst
The situation with the US government debt limit is in the focus of market participants' attention. Republicans insist on significant budget cuts, and Democrats with US President Joe Biden demand an increase in the limit without any conditions. As US Treasury Secretary Janet Yellen recently stated, "if Congress fails to raise the $31.4 trillion debt ceiling before the Treasury runs out of money and is forced to default, it will have to make difficult choices regarding payments to Americans." June 1 remains a "hard deadline" for raising the debt limit, and if the limit is not raised again or canceled altogether, the United States will not be able to pay the bills, Yellen said.
In the current situation of uncertainty, many economists predict an increase in demand for protective assets, in particular, for gold.
At the moment, it has significantly adjusted in price, falling by 5.1% from the local maximum of $ 2062.00 per ounce reached this month. So far, gold is under pressure from the dollar, which finds support in the growth of yields on US government bonds: investors continue to merge them, insuring against the likelihood of default in the US.
From a technical point of view, XAU/USD develops a short-term downward trend towards the key support levels 1905.00, 1896.00, 1882.00. A breakdown of the support level 1872.00 and a further decline will mean the scrapping of the medium-term bullish trend.
In general, above the support levels of 1742.00, 1722.00, the long-term upward dynamics of XAU / USD remains, and our main forecast is to bet on the resumption of its growth, but after the breakdown of the resistance zone at the levels 1974.00, 1980.00, 1987.00.
Support levels: 1954.00, 1905.00, 1896.00, 1882.00, 1872.00, 1843.00, 1800.00, 1788.00, 1742.00, 1722.00.
Resistance levels: 1974.00, 1980.00, 1987.00, 2000.00, 2010.00, 2048.00, 2070.00, 2077.00.
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