U.S. Debt Ceiling Jitters and Its Impact on Gold prices

Gold prices had a volatile trade last week. Prices tumbled below a two-week low, followed by hawkish signals from the Federal Reserve. Further, uncertainty over the U.S. debt ceiling sparked a rebound in the dollar and Treasury yields.

The yellow metal tumbled below 59540, the lowest level since 24 April 2023 weeks as hawkish signals from the Federal Reserve. A slew of policymakers warned this week that inflation still remained too high, which in turn could elicit more interest rate rises by the central bank.

A rebound in the dollar and U.S. Treasury yields weighed on the yellow metal as negotiations continued over raising the U.S. debt ceiling ahead of a June 1 deadline.

Looking ahead, yellow metal prices continued to fluctuate on U.S. debt drama. A fresh breakdown in talks to raise the U.S. debt ceiling which may put pressure on the dollar. And could help with alternative safe havens like Gold again.

Furthermore, Focus now remains on more upcoming FOMC Meeting Minutes. Earlier, a slew of officials signalled that U.S. inflation still remained too high, which could attract more policy-tightening measures by the central bank. Any hint for a rate hike will put pressure on vice versa.

Technical Outlook

After swinging in between gains and losses, Gold prices settled at 60379 down by 0.83%. Prices went deep to their three-week low of 59540 before closing at 60379.00.

A cluster of indecisive candle sticks on the weekly chart is yet indicating a volatile momentum in the near future. Further, RSI 14 and its 9 SMA is turning into a Negative crossover which might be a sign for bearishness to be continued.

However, prices would need to break their immediate support of 59520 to test the next support of 59080-58600-58450. Alternatively, Prices may rebound towards 60500-60850-61000 again.

In the near future trend expects to remain volatile. Further, strength in the U.S. dollar amid Fed rate and Debt ceiling jitters will put pressure on Gold prices.