ALB Limited 22.05.2023

Gold found support from Powell's statements.

After a phone call yesterday that was characterized as positive by both sides, US President Joe Biden and Spokesman Kevin McCarthy will meet today to discuss the debt ceiling issue. While the debt limit issue continues to be a topic of discussion in the US, the price of gold turned upward on Friday following Federal Reserve Chairman Powell's statements on monetary policy. After Powell indicated that the Fed could pause interest rate hikes next month, the dollar index retreated to the 103 level, and gold, supported by the weakness in the dollar, partially recovered some of its losses from last week, ending the week with a gain of nearly 1%. The fact that a definitive conclusion has not yet been reached on the debt ceiling issue and Treasury Secretary Yellen's warning pointing to June 1 increases market pessimism. Progress on the debt ceiling issue in today's meeting between Biden and McCarthy could put pressure on the price of gold. Conversely, if the negotiations yield negative results, it could support gold with a safe-haven demand.

As of the morning hours, spot gold is trading around $1,975 per ounce. In the event of possible pullbacks, key buying levels to monitor are $1,960 and $1,930. On the upside, we are watching $2,000 and $2,040 as critical resistance levels. If these levels are surpassed, we maintain our view that gold may need to find support from a new narrative to surpass the historical peak. Factors such as signs of economic slowdown in macroeconomic data, expectations of interest rate cuts from the Federal Reserve, and potential geopolitical risks contribute to this view.

Tags: USA, Gold, Analysis

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