The prolonged debt ceiling talks have provided support to the Gold Spot (XAUUSD) after the US retail sales and the hawkish remarks from the Fed member dealt a significant blow to the bullion sending it below $2000/ounce for the first time in over a week.

The continued hawkish remarks delivered by the Fed members on Tuesday and the data that showed that US retail sales for April disappointedly grew by 0.4% against the forecasted 0.8% weighed on the gold spot and helped the greenback close the Tuesday trading session on the green. However, the non-yielding bullion is holding steady as the debt ceiling continues to weigh on sentiment. The potential for default helped the precious below metal find buyers due to its safe-haven qualities.

Technical

The 4H chart shows that the precious yellow metal recently broke through a significant near-term psychological level at $2000/ounce, threatening the bullion with a potential selloff. However, with the debt ceiling talks firmly prolonged for the week, a potential exists for the bullion to par losses in the near term and be confined within the 23.60% Fibonacci retracement level and the $1972.69/ounce support level trading range.

The market would keep a keen eye on the range levels as the market reactions around the levels could determine the direction of the spot prices in the short term. A break above the 23.60% Fibonacci retracement level at $2013.65/ounce could trigger a run towards the $2048.03/ounce resistance level, a fraction of the fresh all-time high of $2078.37/ounce. However, a breakthrough below the $1972.69/ounce support level could trigger a selloff towards the $1934.97/ounce support level, with the golden ratio acting as support past the support level.

Summary

The main underlying sentiment towards the gold spots is currently bullish, and the bulls could be confident in reclaiming the $2013.65/ounce price level should the spot price avoid a major selloff towards the $1934.97/ounce.

Sources: TradingView, Reuters, CNBC.

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