Gold Price Prediction [Forecast]: Gold price (Yellow Metal) has failed in defending its immediate support of $1,970.00 in the Asian session. The precious metal has dropped firmly as the Federal Reserve (Fed) policymakers are confident that more interest rate hikes by the central bank are in the pipeline in the fight against stubborn United States inflation.
- Gold Price Forecast: Gold declined below $1,980 in the US session on Monday morning
- Gold Price Today: Factors Influencing Bullion Prices and Market Uncertainty
- Gold price is anticipated to deliver a sheer downside after a breakdown below the demand zone placed in a range of $1,950-1,970.
- Gold price has slipped sharply below $1,970.00 as the Fed’s policy-tightening intension could delay but is far from over.
- Monday’s Biden-McCarthy meeting concluded without an agreement but remained constructive at best.
- Gold price extends losses for the second straight day on Tuesday.
- US Dollar benefits from the hawkish Fedspeak and United States debt-ceiling uncertainty.
- Downside remains compelling for Gold price amid bearish technical indicators.
S&P500 futures have added more gains in the Asian session, portraying a strong recovery in the risk appetite. It seems that investors are confident that US President Joe Biden will get the US debt-ceiling increase ahead. However, Monday’s meeting between US Biden and House of Representatives Kevin McCarthy concluded without an agreement but remained constructive at best.
US Biden has called partisan terms from Republicans as ‘extreme’ as the latter is not allowing extra taxes on the Wealthy community despite Democrats getting ready for some spending cuts. Meanwhile, US Treasury Secretary Janet Yellen is constantly reminding related authorities that the United States economy is moving towards a default swiftly as June 01 is the deadline for addressing obligated payments.
Meanwhile, St. Louis Fed Bank President James Bullard said on Monday that the Fed wants to fight inflation amid a strong labor market. He further added that the policy rate will have to go higher this year, perhaps by 50 basis points (bps).
Gold Price Technical Analysis
Gold price is anticipated to deliver a sheer downside after a breakdown below the demand zone placed in a range of $1,950-1,970 on a four-hour scale. The 20-period Exponential Moving Average (EMA) at $1,975.54 is acting as a barricade for the Gold bulls.
The Relative Strength Index (RSI) (14) has slipped back into the bearish range of 20.00-40.00, which signals that the downside momentum has been triggered again.
United States debt ceiling talks drag on
In Tuesday’s trading so far, markets stay hopeful of a potential debt-ceiling deal sooner (than later) after yet another round of Biden-McCarthy meetings ended in productive talks but no deal. “I just concluded a productive meeting with Speaker McCarthy about the need to prevent default,” said President Biden after his meeting.
Meanwhile, US House Speaker Kevin McCarthy noted that “the meeting was productive in areas where we have differences of opinion. Tone of discussion was improved from previous times.”
The US Dollar saw a temporary whipsaw on these headlines, although regained its lost footing amid steady US Treasury bond yields. At the moment, Gold price is posting small losses, eyeing deeper correction if the US Dollar upside gathers strength over a looming debt ceiling deadline in the United States, which put a lid on risk sentiment.
Looking ahead, all eyes will stay focused on the US debt-ceiling talks, Fedspeak and the US Preliminary S&P Global business PMIs for fresh US Dollar valuation and its impact on the Gold price. US S&P Global Manufacturing PMI is seen lower at 50.0 in May vs. 50.2 booked previously while the Services PMI is likely to hold steady at 53.6 in the reported period.