Daily Price Outlook
Gold found stability on Monday following three consecutive days of losses, as the dollar weakened and investors remained cautious about the standoff over the U.S. debt ceiling, which could raise concerns about a global economic slowdown.
At 1132 GMT, spot gold rose by 0.1% to $2,013.99 per ounce, rebounding from its lowest level since May 5 reached on Friday. Meanwhile, U.S. gold futures remained mostly unchanged at $2,018.80.
According to Han Tan, chief market analyst at Exinity, gold is still supported above the $2,000 mark due to ongoing concerns surrounding U.S. debt-ceiling discussions and the belief that the Federal Reserve has concluded its rate hikes.
In May, U.S. consumer sentiment dropped to a six-month low due to concerns that political negotiations over increasing the federal government's borrowing limit could trigger a recession.
To address this issue, U.S. President Joe Biden announced plans to meet with congressional leaders on Tuesday to discuss a strategy for raising the nation's debt limit and avoiding a catastrophic default.
Exinity's Tan cautioned that there is a possibility of gold being temporarily pushed below the $2,000 level if a major risk-on sentiment emerges from a resolution to raise the U.S. debt ceiling in the near term.
He further noted that gold could face additional downward pressure if Federal Reserve officials signal the likelihood of another interest rate hike. The appeal of gold diminishes in the presence of higher interest rates.
A number of Federal Reserve representatives, including Chair Jerome Powell, are scheduled to deliver speeches this week. According to the CME FedWatch tool, the market currently assigns a 78.8% probability of the Fed maintaining the current interest rate level in June.
Fed Governor Michelle Bowman stated on Friday that if inflation remains high, it is likely that the central bank will need to further increase interest rates.
GOLD – Technical Outlook
Gold prices have dropped below the $2016.95 level, indicating a continued bearish correction and a potential decline towards the target level of $1977.25. The EMA50 is exerting downward pressure on the price, supporting the ongoing bearish trend.
It is important to note that the stochastic indicator has clearly lost its positive momentum, adding to the signals that suggest a further decline.
Consequently, our outlook remains bearish for the near future, unless there is a breakthrough above the $2016.95 level followed by $2024.00, and a sustained hold above these levels.
The projected trading range for today is expected to be between the support level of $1995.00 and the resistance level of $2025.00.
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