Gold maintains psychological support level of $2,000 despite price decline

Noticeable increase in gold price, trading around $2,016 since the beginning of the week

By Raed Alkhedr | @raedalkhedr | 15 May 2023

Technical Analysis_Golddd-3
  • Gold continues to move within the ascending channel on the 4-hour timeframe

  • The psychological support level for gold is deemed significant at $2,000

  • There are concerns regarding the possibility of the United States defaulting on its debts

Impact of economic factors on gold movements

The precious metal began the week with a slight increase, trading near $2,016 per ounce. This follows a significant decline in gold prices during last week's trading, which was influenced by the continued rise of the US dollar index. The increase in the value of the US currency is attributed to statements made by Janet Yellen, the US Treasury Secretary, who warned about the risks of the United States defaulting on its debts due to the failed negotiations between Biden and McCarthy regarding the debt ceiling crisis. Yellen stated that such a possibility would threaten the US economic recovery.

Meanwhile, the markets are eagerly anticipating the meeting between President Joe Biden and Republican House Speaker Kevin McCarthy scheduled for this week. The purpose of the meeting is to discuss and reach an agreement to raise the US debt ceiling, with just three weeks remaining before the United States defaults on its debts.

In addition, Neil Kashkari, a member of the US Federal Reserve, noted that despite improvements in the US job market, inflation continues to exceed the bank's targeted levels. He further emphasized that the job market remains notably robust.

Key levels affecting gold movements

After reaching an all-time high at $2,080, gold experienced a correction towards the significant psychological support level of $2,000. This level represents the lower boundary of the ascending channel that gold has been moving within on the 4-hour timeframe. However, gold managed to hold onto this support level and rebounded, currently trading around $2,016.

Should gold maintain the support level of $2,000, the current upward trend could continue, potentially testing the resistance level of $2,025. Surpassing this level may contribute to an extension of the uptrend towards the resistance level of $2,050. If gold successfully surpasses this level, it could then test the all-time high of $2,080, and even exceed it to reach the upper boundary of the ascending channel at $2,100.

Conversely, if gold fails to sustain the support level of $2,000 and breaks below it, the downtrend may persist and test a stronger support level at $1,970. A break below this level could further extend the downtrend towards levels of $1,950 - $1,935.

gold 15-5-2023