XAUUSD: The next goal of the golden bears!

Gold bears approach $1,930 support on US debt ceiling extension

Technical analysis:

Let's begin by creating boxes in frame H1 and doing so before new news is released. Our attention should be on the approaching EMA 34 and EMA 89, which are moving towards the box top range. While the RSI is below average, it has not yet hit the alarming level. Additionally, the trading volume remains constant and at a low level.

Market Outlook:

Economic woes, US debt ceiling concerns continue to lend support

Currently, the equity markets are experiencing a softer tone due to worries about the global economic slowdown and the US debt ceiling. However, this situation could offer some support to the safe-haven Gold price and limit any deeper losses. Unfortunately, the negotiations between Democrats and Republicans to raise the government's $31.4 trillion borrowing limit have not made much progress. Additionally, Fitch has placed the US on negative watch for its top-level "AAA" rating, while credit rating agency DBRS Morningstar has put the US on review for a downgrade on Thursday. These factors have reduced investors' desire for riskier assets.

Comment:

Dollar edges down as U.S. debt ceiling deal dents safe-haven appeal

The dollar edged down on Monday, pulling back from six-month peaks against the yen as a U.S. debt ceiling deal lifted risk appetite across financial markets and dented the greenback's safe-haven appeal.

Trade active:

"The Fed has no desire to conduct monetary policy through financial crises," said Wendy Edelberg, director of The Hamilton Project at the Brookings Institution. "And so they have to thread a needle if they see their actions creating crises. Then they need to mitigate that."

Trade active:

🟢 The House Rules Committee said it will meet Tuesday afternoon to discuss the debt ceiling bill, which must be approved before June 5

🟢 It comes after Democratic President Joe Biden and Republican House Speaker Kevin McCarthy on Sunday signed an agreement to temporarily freeze the debt ceiling and limit some federal spending aimed at preventing US debt defaults. Biden said the agreement is ready to be taken to Congress for a vote.

Comment:

Unlike oil, a recessionary outlook would typically be good for gold. But recently, gold prices have fallen as the situation with the regional banks in the US had proved to be far less concerning than initially thought by the market. Recent data suggest that even a tiny expected hit to US growth may be pessimistic. Nonetheless, we like gold from here as we move past the market Fed hawkishness preception in June.

China and EM central banks continue to purchase gold rapidly, a trend that we expect to continue to dominate gold demand on the back of elevated geopolitical risks and de-dollarisation trends.

Trade active:

JPMorgan President and CEO, Jamie Dimon:

- Everyone should be prepared for higher interest rates than these.
- There are some risks that there will be some loss of control in the credit sector.