Gold prices are flat on Monday. The interim deal over the weekend in the US debt limit debate seems to have affected the price of the yellow metal. So what are the gold predictions? Let’s see.
Gold price linked to developments
cryptocoin.com Spot gold is at $1,946.84 per ounce. Accordingly, the gold price is stagnant. It’s close to the two-month lows it hit on Friday. On the other hand, US gold futures contracts were up 0.1% at $1,946.40. The factor that undermined gold’s appeal as a safe-haven was US President Joe Biden. Accordingly, on Sunday, he had a meeting with Speaker of the House of Representatives Kevin McCarthy. It announced a budget agreement to suspend the $31.4 trillion debt limit through January 1, 2025.
Data released on Friday show that consumer spending in the US rose more than expected in April. As a result, it points to accelerating inflation. According to the CME FedWatch tool, the report also explains the expectation. It raised the probability that the US Federal Reserve will raise 25 basis points in June and interest rates will remain at this level for the rest of the year, to 65.3%. City Index senior market analyst Matt Simpson made a statement on the subject. “The fact that the probability of an increase dropped to 17.4% a week ago shows how the expectations for the Fed to end the rate hike have been abandoned. Accordingly, this helped the US dollar to rise again in the third week and put pressure on gold prices. ” says.
What are analysts saying?
The dollar index is near a two-month high. However, it fell 0.2% on the day. This has made gold more affordable for overseas buyers. According to Reuters technical analyst Wang Tao, the situation is different. It is possible for the gold price to break the support at $1,938. In this case, a regression to the range of $1,919-1,929 is possible. On the other hand, the comments of the International Monetary Fund (IMF) Director Kristalina Georgieva are also in favor of gold sellers. Data from the US last week showed an optimistic mood. The data prompted Georgieva to express that US interest rates will need to be higher for longer. Alternatively, Loretta Mester, Chairman of the Federal Reserve Bank of Cleveland, said the Personal Consumption Spending (PCE) Price Index released Friday underlines the slow progress in inflation. Austan Goolsbee, Chairman of the Federal Reserve Bank of Chicago, also made a statement over the weekend. He welcomed the news of the US debt limit settlement. However, he said, “I take care not to act prejudiced and make decisions while the meeting is weeks away.”
Given the recent increased support for the Federal Reserve’s (Fed) rate hike by 25 basis points (bps) in June, the price of gold may witness further declines. But it all depends on the major political developments in the US this week and US nonfarm payrolls data. The debt limit agreement is expected to pass the House of Representatives this week.
Technical analysis points to these points
The gold price has fallen for the last three weeks in a row. Accordingly, it eased below the three-week descending resistance line at $1,954. All in all, the pullback in the gold pair ignores the downside performance of the Relative Strength Index (RSI) line at 14 over the past few days. However, bearish signals from the Moving Average Convergence and Divergence (MACD) indicator are attracting Gold buyers. If the gold price exceeds $2,000, it is likely to reach $2,050, the previous month’s high. On the other hand, the recent peak of $2,080 will also come to the fore.
On the other hand, a one-day close below the resistance-support line at $1,954 is not in favor of Gold sellers. Because from November 2022, an upward sloping trendline near $1,930 could challenge the bears before they give control.
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