Gold price is forming a short-term downtrend

22 May 2023 186
Gold price is forming a short-term downtrend

The U.S. President Joe Biden and House Speaker Kevin McCarthy will meet at the White House on Monday. The politicians will address the issue of raising the borrowing limit and discuss ways to prevent default in the country.

Earlier, Treasury Secretary Janet Yellen said that U.S. authorities might run out of money to pay their debt by June 1. On Sunday, the government has already held negotiations on this topic, but did not come to a consensus on the country's debt limit.

According to the Republicans, the U.S. budget plan for 2024 should be revised downward compared to last year’s figures. McCarthy said that the final bill is unlikely to fundamentally change the situation, but it might set a trend in the allocation of government spending.

Representatives of the U.S. Democratic Party do not agree with this position, thereby voting for raising the country’s borrowing limit. According to them, an increase in debt ceiling will help to prevent a default in the U.S.

However, both sides hope to extend the decision until June 15, as the authorities expect a new wave of tax incomes. It will have an impact on commodity prices in the country.

If the U.S. President and House Speaker manage to set a new debt ceiling today, the U.S. dollar will be supported again, while gold will lower its positions in the short term.

On the other side, the expansion of government spending might enhance investors’ fears about the stability of the U.S. dollar and contribute to higher inflation in the long term. Concern and uncertainty in economic circles persist, so the rise in the precious metal as a safe-haven asset remains high in the long term.

The gold price is in the formation of a downtrend on the H1 timeframe. Approaching the downtrend resistance, the price rebounded from it, signaling a continuation of the downtrend.


The short-term outlook for gold suggests buying

The target is at the level of 1952.00.

Part of the profit should be taken near the level of 1963.00.

The Stop-loss is at the level of 1989.50.

Bearish trend is of short-term nature, so it is worth selecting the trading volume of not more than 2% of your balance.

This content is for informational purposes only and is not intended to be investing advice.

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