Gold Price Forecast: XAU/USD bears in control despite optimism about United States debt ceiling extension

  • Gold Price breaks short-term key supports as bears cheer firmer US Dollar.
  • Hopes of United States debt limit extension, upbeat US data and hawkish Federal Reserve talks weigh on XAU/USD.
  • S&P500 Futures remain depressed tracing downbeat Wall Street performance, Treasury bond yields rise amid risk-off mood.
  • Risk catalysts will be the key to follow for the Gold price predictions.

Gold Price (XAU/USD) holds lower grounds at a two-week bottom surrounding $1,990 early Wednesday, after breaking the key short-term support lines during the previous day’s fall. That said, the yellow metal bears the burden of the strong US Dollar, as well as upbeat United States data, while failing to justify the optimism surrounding the US debt limit extension.

Gold price drops on firmer US Dollar, fails to cheer debt limit hopes

Gold price broke important supports and marked the biggest daily loss in nearly a fortnight as the US Dollar Index (DXY) remains firmer despite the recent relief in the risk markets due to the receding fears of the United States default. The reason for the DXY run-up could be linked to the strong US data and the hawkish Federal Reserve (Fed) commentary.

Recently, Reuters reported that the Democratic President Joe Biden and top congressional Republican Kevin McCarthy's US debt ceiling negotiations ended on Tuesday after less than an hour, as the looming fear of an unprecedented American debt default prompted Biden to cut short an upcoming Asia trip. The news also mentioned that the meeting ended on an upbeat and unexpected note as McCarthy, coming out of the meeting with Biden and other congressional leaders, said, "It is possible to get a deal by the end of the week."

On Tuesday, US Retail Sales improved to 0.4% MoM for April, from -0.7% prior (revised) versus 0.7% expected. More importantly, Retail Sales Control Group for the said month crossed market forecasts of 0.0% and -0.4% prior with 0.7% actual figure whereas Retail Sales ex Autos matches 0.4% MoM estimations for April¸ surpassing the -0.5% prior. Further, the US Industrial Production MoM rose to 0.5% for April versus expectations of printing a 0.0% figure.

It should be noted that Richmond Fed Thomas Barkin said in an interview with the Financial Times (FT) that if inflation persists, or God forbid accelerates, there’s no barrier in my mind to further increases in rates. On the same line, Cleveland Fed President Loretta Mester said, “I don’t think we're at that hold rate yet.”

Amid these plays, the US Treasury bond yields remained firmer and Wall Street witnessed losses on Tuesday, which in turn allowed the US Dollar to cheer the haven demand. As a result, the Gold price remained pressured.

China data, geopolitical fears also weigh on XAU/USD

Apart from what’s already mentioned above, downbeat data from China, one of the world’s biggest Gold consumers, also weigh on the XAU/USD price. Additionally, fears of more West versus Russia tension and the US-China tussles exert more downside pressure on the Gold price. It should be noted that the recession woes are an extra load on the Gold price.

Moving on, Wednesday’s light calendar may allow the Gold price to consolidate recent losses in a case where the sentiment improves. As a result, the risk catalysts will be eyed for clear directions of the XAU/USD.

Gold price technical analysis

Gold price remains well below an eight-day-old horizontal support of around $2,000, as well as an upward-sloping support line from late March, close to $1,993 by the press time, suggesting the bear’s dominance.

It’s worth noting that the bearish signals from the Moving Average Convergence and Divergence (MACD) indicator teases sellers but the lower lows on the Relative Strength Index (RSI), placed at 14, hint at limited downside room.

As a result, the XAU/USD sellers might want to wait for a clear downside break of the 50-DMA support of $1,982 for conviction.

Meanwhile, the Gold price corrective bounce needs validation from the aforementioned support-turned-resistances around $1,993 and $2,000 before recalling the XAU/USD bulls targeting a five-week-old horizontal resistance area surrounding $2,050.

Following that, the latest all-time high of around $2,080 and the $2,100 round figure will be on the radars of the XAU/USD bulls.

Overall, the Gold price remains on the seller’s desk but a sustained downside break of $1,982 becomes necessary to convince bears.

Gold price: Daily chart

Trend: Recovery expected

Additional important levels

Today last price 1989.22
Today Daily Change -27.24
Today Daily Change % -1.35%
Today daily open 2016.46
Daily SMA20 2008.72
Daily SMA50 1975.65
Daily SMA100 1922.14
Daily SMA200 1822.15
Previous Daily High 2022.18
Previous Daily Low 2007.36
Previous Weekly High 2048.27
Previous Weekly Low 2000.95
Previous Monthly High 2048.75
Previous Monthly Low 1949.83
Daily Fibonacci 38.2% 2016.52
Daily Fibonacci 61.8% 2013.02
Daily Pivot Point S1 2008.49
Daily Pivot Point S2 2000.51
Daily Pivot Point S3 1993.67
Daily Pivot Point R1 2023.31
Daily Pivot Point R2 2030.15
Daily Pivot Point R3 2038.13



Share: Feed news

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content

Recommended content

Editors’ Picks

EUR/USD clings to daily gains above 1.0650

EUR/USD clings to daily gains above 1.0650

EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.


GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.


Gold holds steady at around $2,380 following earlier spike

Gold holds steady at around $2,380 following earlier spike

Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.

Gold News

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in

Bitcoin price shows no signs of directional bias while it holds above  $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research. 

Read more

Week ahead – US GDP and BoJ decision on top of next week’s agenda

Week ahead – US GDP and BoJ decision on top of next week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.

Read more