Gold experienced a decline subsequent to the approval of the US debt ceiling law
Gold approached its major support level around $1930.
The passage of the US debt ceiling law contributed to an improvement in risk appetite
The price of gold retreated and approached the significant support level of approximately $1930
Negative head and shoulders pattern is being formed on the gold chart
Influential economic factors impacting gold movements
Gold prices experienced a significant decline due to the strengthening of the US dollar index against most major currencies and an improvement in risk appetite following the passage of the US debt ceiling law. At the beginning of the week, gold was trading around $1943 per ounce, registering a modest decline.
Furthermore, statements from Federal Reserve officials revealed a less hawkish stance, emphasizing the temporary halt of interest rate hikes to assess the impact of the recent monetary tightening cycle implemented by the Fed. This development has increased the likelihood of the Fed pausing interest rate increases at its upcoming meeting this month.
Moreover, the White House announced the approval of the US Senate's debt ceiling agreement, a bill that suspends the current debt ceiling and prevents the United States from defaulting on its debt before the deadline.
Additionally, data released by the US Department of Labor indicated that the world's largest economy added 339,000 jobs in May, surpassing the previous reading of 253,000 jobs. However, the unemployment rate increased to 3.7% from the previous reading of 3.4%.
Key pivot and technical levels impacting gold movements
After a successful upward move to the resistance level of $1983, gold faced a failure in breaking through, resulting in a subsequent decline. Currently, gold is trading around the $1940 level, and there is a likelihood that this decline will continue to test the support level of $1930.
In the event that gold breaches the main support level of $1930, it could intensify selling pressure, causing a further decline towards the $1900 level. Breaking below this level may extend the downward movement, leading to a test of the support level at $1885.
If gold manages to hold onto the support level of $1930 and experiences a rebound, it may encounter the support level of $1950. A successful break above this level could potentially trigger a rise, testing the strong resistance level of $1985. Surpassing this resistance level would significantly increase the likelihood of a continued upward movement towards the $2000 levels.