Gold price oscillates in a narrow range just below a one-week high
Gold price struggles to capitalize on the overnight bounce from the $1,932 region, or its lowest level since March 17, and seesaws between tepid gains/minor losses through the first half of the European session on Wednesday. The XAU/USD currently trades around the $1.960 level, nearly unchanged for the day and just below a one-week high touched earlier today. A combination of supporting factors lifts the US Dollar (USD) to over a two-month high, which, in turn, acts as a headwind for Gold price.
The legislation brokered by United States (US) President Joe Biden and House Speaker Kevin McCarthy to lift the $31.4 trillion debt ceiling and achieve new federal spending cuts passed an important hurdle late on Tuesday. In fact, the bill cleared its first procedural hurdle on Tuesday as the House Rules Committee voted 7-6 to advance it to the floor for a debate and a final passage vote on Wednesday. This, along with expectations that the Federal Reserve (Fed) will likely raise interest rates, provides a goodish lift to the Greenback. Investors now seem convinced that the US central bank will keep interest rates higher for longer and are now pricing in a greater chance of another 25 bps lift-off at the next Federal Open Market Committee (FOMC) policy meeting in June. The bets were lifted by the US Personal Consumption Expenditures Price Index - the Fed's preferred inflation gauge - released on Friday, which indicated that inflation remains sticky. This further contributes to capping the upside for the non-yielding Gold price. That said, the risk-off impulse is seen lending some support to the safe-haven precious metal and helping limit the downside, warranting caution for bearish traders.
From a technical perspective, any subsequent move up beyond the daily peak, around the $1,965 region, could attract fresh sellers and remain capped near the $1.980 region. The latter should act as a pivotal point, which if cleared could allow the Gold price to reclaim the $2.000 psychological mark. On the flip side, the $1,943 area seems to protect the immediate downside ahead of the 100-day Simple Moving Average (SMA) and the multi-month low, around the $1,932 region. A convincing break below the said support levels will be seen as a fresh trigger for bearish traders and drag the XAU/USD further towards the $1,900 round-figure mark.
From a technical perspective, any subsequent move up beyond the daily peak, around the $1,965 region, could attract fresh sellers and remain capped near the $1.980 region. The latter should act as a pivotal point, which if cleared could allow the Gold price to reclaim the $2.000 psychological mark. On the flip side, the $1,943 area seems to protect the immediate downside ahead of the 100-day Simple Moving Average (SMA) and the multi-month low, around the $1,932 region. A convincing break below the said support levels will be seen as a fresh trigger for bearish traders and drag the XAU/USD further towards the $1,900 round-figure mark.