- The price of gold continues to lose ground for the third day in a row and falls to almost a month low.
- A combination of factors continues to support the US dollar and push money flows away from XAU/USD.
- Fears of a slowdown in the global economy could lend some support to the safe-haven yellow metal.
The price of Gold (XAU/USD) falls for the third day in a row, it is also the sixth negative day of the previous seven, and falls to lows of almost a month during the first half of the European session on Thursday. XAU/USD is trading currently just above the $1,970 leveldown almost 0.50% on the day, and is being pressured by a combination of factors.
The sustained purchase around the Dollar continues to weigh on the price of Gold
The US dollar continues its recent upward trend of the last two weeks and reaches a new high since March 24, which in turn moves away the purchase flows of gold, denominated in dollars. In the background of the Speculation that the Federal Reserve (Fed) will keep interest rates higher for longeroptimism about the possible raising of the United States (US) debt ceiling continues to support high US Treasury yields and benefits the USD.
US Debt Ceiling Optimism Further Weakens Safe Haven XAU/USD
It’s worth remembering that recent hawkish comments from several Fed officials pushed back market expectations for rate cuts later this year. In addition, the President of the USA, Joe Biden, and Republican Congressman Kevin McCarthy underlined their determination to reach an agreement soon to raise the debt ceiling public, which amounts to 31.4 trillion dollars. This helps calm fears of an unprecedented US debt default and boosts investor confidence, further weighing on the safe-haven gold price.
The fear of a recession could give some support to the price of gold
However, market participants continue to concerned about slowing global growth, especially in China, which could support XAU/USD and help limit deeper losses, at least for now. Traders may also refrain from entering aggressive positions before Fed Chairman Jerome Powell’s appearance on Friday. Investors will be looking for further clues on the near-term monetary policy outlook from the US central bank, which should help determine the next directional move for the gold price.
Focus on Thursday’s US data and Fed remarks for fresh momentum
Meanwhile, the US economic agenda for Thursday, in which weekly initial jobless claims, Philadelphia Fed manufacturing index, and existing home sales, could generate new momentum. Apart from this, scheduled speeches by Fed members, US bond yields and US debt limit negotiations will influence dollar price dynamics. This, coupled with broader risk sentiment, could create short-term opportunities around the gold price.
Gold Price Technical Outlook
From a technical point of view, continuation of selling below the horizontal support of $1,970 could be a new trigger for bears. This could leave the gold price vulnerable to extending its recent corrective pullback from the all-time high around the $2,078-$2,079 area touched earlier this month. The XAU/USD could then accelerate the decline towards the test of the 100-day SMA, currently near the region of $1,925with some intermediate support near the region of $1,950-$1,948.
On the other hand, any recovery attempt above the level of $1,980 will likely face strong resistance and remain constrained near the psychological level of $2,000. That being said, sustained strength above this region could trigger a short-covering move and push the price of gold to the price barrier. $2,020-$2,021 on the way to the region of $2,035-$2,040. Some continuation buying should allow XAU/USD to rally back towards the all-time high and extend momentum towards the conquering level. $2,100.
Gold additional technical levels
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
