Prices of selling gold find support around the 100-day moving average. The market awaits the approval of the US debt ceiling deal. Meanwhile, employment data and interest rate hike probabilities remain crucial factors for gold’s outlook. Gold prices faced a decline in Asian trade as the Dollar Index (DXY) reached new highs. However, XAU/USD found support at the 100-day MA around the $1936/oz level during the European session, hinting at a potential recovery.
The US debt ceiling deal awaits approval from Congress members, creating anticipation among market participants.
The outcome of this agreement and its impact on the market will provide insights into future trends, particularly in light of upcoming US jobs data. Additionally, the recent support for the US dollar and the increased probability of a rate hike in the Federal Reserve’s June meeting have influenced market sentiment.
XAU/USD Bounces Off 100-Day MA as DXY Retreats
Technical analysis suggests a potential shift in Gold price action, with yesterday’s daily candle closing as an inverted hammer, indicating a possible bounce to the upside. Following a dip in the Asian session, XAU/USD has bounced off the 100-day MA and is currently trading around $1945/oz. If the upward momentum continues, the $1950 level will serve as initial resistance, followed by levels at $1957 and $1970. On the other hand, a break below the 100-day MA may lead to a revisit of the $1925 handle and a further decline toward the psychological support at $1900.
The future of Gold prices is influenced by various factors, including the potential impact of the debt ceiling deal on safe-haven demand and the direction of the US dollar. As the market continues to navigate these dynamics, both bulls and bears are expected to vie for control.
US Debt Ceiling Deal Awaits Approval, Impacting Gold Market
Given yesterday’s Bank holiday in the US and UK, market participants are keeping a close eye on the reaction to the US debt ceiling agreement (in principle). This deal still requires ratification by both White House and Republican Congressional leaders before reaching US President Biden’s desk. US Treasury Secretary Yellen recently shifted the potential default date from June 1 to June 5, providing policymakers with a little more time.
The potential impact of the debt ceiling agreement is a crucial factor to consider when analyzing the carat gold rate. Truly, there is room for potential risks during this interim period.
Therefore, market reaction today could provide a gauge of what to expect ahead of US jobs data on Friday. The recent support for the US dollar in the Federal Reserve’s June meeting has contributed to the dollar’s strength. The market is now pricing in around a 56% chance of a 25bps hike in June, up from 28% a week ago. This week’s US non-farm payrolls (NFP) and jobs data will play a significant role in determining rate hike probabilities, should the labor market continue its resilient trend.
Market Sentiment and Dollar Strength Influence Gold Price Movement
Gold price action has been suggesting further downside due to improving sentiment and a strong dollar. However, yesterday’s daily candle closed as an inverted hammer, hinting at a potential shift and bouncing to the upside. Following a dip in the Asian session, XAU/USD has bounced off the 100-day MA and is currently trading around $1945/oz.
Continuation of the bounce this morning could encounter resistance at the $1950 level, followed by levels at $1957 and $1970. If bulls take control and the rally gathers steam, the 50-day MA around the $1991 handle becomes a target.
Conversely, a break below the 100-day MA around the $1936 mark may lead to a revisit of the $1925 handle. Beforehand, it could potentially tick lower toward the psychological support at $1900. This price action and potential recovery present an interesting opportunity for investors considering selling gold.