Gold moves lower for the 3rd week in a row

طلا continues moving lower, as progress appears to have been made in prevented the US from defaulting on its debt, with traders awaiting the FOMC May meeting minutes tomorrow and the Core PCE rates on Friday. Furthermore, at the time of this report, it appears that the shiny metal is moving in a downwards fashion. In this report, we aim to shed light on the catalysts driving the precious metal’s price, assess its future outlook and conclude with a technical analysis.

US debt talks in the spotlight.

Since last week, legislative leaders appear to have made progress in reaching an agreement to raise the debt ceiling limit, as we rapidly approach the so called ‘X-Date’. Despite lawmakers such as, House Speaker McCarthy (R) and President Biden (D) both stating that the meeting held between them was productive, with some progress being made on reaching a deal, the two sides have yet to find common ground on key اساسی differences. Few examples of issues of disagreement include raising taxes و closing tax loopholes for oil و pharmaceutical companies alongside the spending allocation assigned to military operations. As a result, should negotiations break down, we may see heightened market نوسان due to the imminent deadline upon which the US may default on its debt. Once again, we re-iterate the potential scenario where should the US fail to uphold its financial obligations, it would most likely lead to the nation being downgraded by credit rating agencies, followed by a mass sell–off of US debt which could potentially spark a US stock market crash, as the financial industry remains on thin ice. In the event that the debt ceiling standoff continues, we may see market sentiment shift away from the optimistic outlook of a deal being reached, leading to معامله‌گران getting anxious that they may be over-exposed in the US markets. This might lead to the bullion receiving safe haven inflows, given its status as a hedge during times of financial instability, hence moving the precious to higher ground amidst economic و political turmoil.

US Financial releases could swing the markets in either direction.

One may be excused for forgetting that during tomorrow’s American session, the FOMC’s last meeting minutes are due to be released. Therefore, given the recent dovish rhetoric from Fed Chair Powell stating that the Fed’s “policy rate may not need to rise as much as it would have otherwise to achieve our goals”, could imply that the Fed may be nearing its peak rate or may consider keeping interest rates at current levels. Hence, given the slightly dovish comments from Fed policymakers, whose comments may be attempting to prepare the markets ahead of release of the meeting minutes, may indicate that there is growing pressure towards the Fed, to pause rates sooner rather than later. Furthermore, in combination with the core PCE rates on Friday, which are expected to decrease, we may see the precious gaining on the back of a weaker dollar, potentially bringing the bullion back above the $2000 key psychological level. On the other hand, should the FOMC minutes take a more hawkish tone with the indication of prolonged rate hikes, in addition to the PCE rates coming in higher than expected, we may see the precious loosing further ground in its battle against a stronger dollar.

تجزیه و تحلیل فنی

XAUUSD H4 Chart

• Support: 1950 (S1), 1925 (S2), 1905 (S3)
• Resistance: 1975 (R1), 2005 (R2), 2045 (R3)

Gold’s price seems to move in a downwards fashion, having broken below its prior support which has now turned resistance at 1975 (R1). We maintain a bearish outlook for the bullion, with the RSI indicator below our 4 hour-chart failing to break above the reading of 50 on numerous occasions, indicative of a continued bearish sentiment surrounding the precious, as the US debt talks progress. For our bearish outlook to continue, we would like to see a clear break below the 1950 (S1) support level with the next target for the bears being the 1925 (S2) support base.  On the other hand, for a bullish outlook, we would like to see a clear break above resistance at the 1975 (R1) line, with the next potential target for the bulls being the 2005 (R2) resistance barrier, which would also coincide with the break above the key $2000 psychological barrier. Please note that should the US debt talks break down or reach an agreement, we may see heightened market volatility within a short time period.

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