Gold prices stabilize on Tuesday as traders analyze comments from Federal Reserve System (Fed) officials about high interest rates. At the same time, the discussion of the U.S. debt ceiling and the risk of default are controlling further declines in the price of gold.
According to Matt Simpson, senior market analyst at City Index, regulatory members continue to express opposition to plans for interest rate cuts this year. This slightly reduces the price of gold.
On Monday, the U.S. Central Bank signaled that interest rates would remain high and may even rise, considering the slow decline in inflation.
Meanwhile, negotiations over the debt ceiling continue. However, there is a risk of a U.S. default as Democrats and Republicans continue to increase tensions. This uncertainty leads to the gold price staying stagnant.
The economists at ANZ Bank discuss the possible decision of the U.S. regulators.
According to them, an agreement on temporary cancellation of the state debt ceiling for several months is expected. This will give the debate participants more time to negotiate and get a result that is satisfactory to all involved sides.
Negotiations during this period may be even more tense. This, in turn, could provoke market instability and may cause difficulties for economic growth.
The U.S. President and Republican Representative Kevin McCarthy are scheduled to meet tonight for discussions.
The result of the negotiations may determine the movement of the price for gold in the short term. If any agreement is reached, confidence in the markets will begin to recover and uncertainty will be reduced. In this case, the price of safe haven assets may fall, and as a consequence, the price for gold will decrease. But today suggests several scenarios, and the possibility that Joe Biden and Kevin McCarthy's meeting will go nowhere is also high.
In terms of the technical analysis, the price of gold continues to form an expanding upward correction trend on the H4 timeframe. As long as the price is not out of this corridor, trades in the direction of its formation should be considered.
The best entry point to buy gold is near the trend support at 1995.00.
To buy near the level of 1995.00.
The target is at the level of 2045,00.
Part of the profit should be fixed near the level of 2020,00.
The stop-loss is at the level of 1975,00.
Bullish trend has a short-term character, so the volume of trade should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.