Gold Searches for Direction Near Monthly Lows
Alex Boltyan | May 24, 2023 02:27PM ET
Gold prices edged lower on Wednesday but overall continue to hover within a limited range near monthly lows as risk aversion surrounding financial markets benefits the US dollar.
At the time of writing, the spot price, XAU/USD, is trading in the $1,960 area, having hit a daily low of $1,956. Still, the yellow metal has entered a consolidative phase after hitting a six-week low of $1,952 last week, capped by the $1,990 area on the upside.
The market focus remains on US debt-ceiling negotiations ahead of the June 1 deadline. United States House Speaker Kevin McCarthy (Republican) said in a press conference that they still have disagreements, but he reassured the US will not default and expressed optimism about eventually reaching a deal.
On Wednesday, the Federal Reserve published the minutes of the Federal Open Market Committee (FOMC) May 2-3 policy meeting. The document revealed that FOMC members remained split on whether to support more interest rate hikes even though they agreed that inflation was still "unacceptably high."
From a technical perspective, the XAU/USD pair maintains a short-term negative bias according to indicators on the daily chart, although the bearish momentum has diluted given the horizontal price action seen over the last few days.
A break below the $1,950 level could add pressure on the metal, targeting the 100-day Simple Moving Average (SMA) at the $1,930 and the $1,900 psychological level. On the other hand, a bounce above the $1,990-$2,000 resistance area could improve the short-term perspective, aiming at record highs in the $2,075 region.
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