- Gold price has checked in below the $2,020.00 support amid a recovery in the USD Index.
- A rise in US debt ceiling will flush significant liquidity into the economy and would improve appeal for the Gold as safe-haven.
- Gold price is declining towards the lower portion of the Rising Channel pattern plotted from $1,934.34.
Gold price (XAU/USD) sensed selling pressure while attempting to surpass the critical resistance of $2,030.00 in the Asian session. The precious metal has corrected to near $2,020.00 and is expected to display more weakness as the US Dollar Index (DXY) has shown a stellar recovery.
The USD Index has climbed above 101.50 on expectations that more stubborn inflation data after incremental Nonfarm Payrolls (NFP) report could force the Federal Reserve (Fed) to keep interest rates higher for a longer period. According to the preliminary report, headline inflation is seen steady at 5.0% while the core Consumer Price Index (CPI) that excludes oil and food prices is seen softening to 5.5% vs. the prior release of 5.6%.
Meanwhile, S&P500 futures have added more losses in Asia. The 500-US stocks basket remained lackluster on Monday as investors demand clarity over US debt ceiling discussions. US President Joe Biden has invited some top Republican leaders for approving a debt ceiling raise to avoid further delay as it could severely damage the US economy. Republican House of Representatives Speaker Kevin McCarthy is expected to negotiate heavily on spending initiatives to cut the deepening Budget deficit.
A rise in the US debt ceiling will flush significant liquidity into the economy and would improve the appeal of the Gold price as safe-haven.
Gold technical analysis
Gold price is declining towards the lower portion of the Rising Channel chart pattern plotted from March 22 low at $1,934.34 on a four-hour scale. The 20-period Exponential Moving Average (EMA) at $2,024.26 has acted as a barricade of the Gold bulls.
Meanwhile, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bullish range of 60.00-80.00, indicating exhaustion in the upside momentum.
Gold four-hour chart
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