Daily Analysis XAUUSD - 18 May 2023

The price of gold (XAU/USD) experienced significant selling pressure after pulling back from $1,985.00 earlier in the European session. The precious metal is anticipated to face further weakness if it slips below the immediate support level of $1,970.00. This decline is primarily attributed to the growing optimism surrounding the approval of a US debt-ceiling raise, which is weighing heavily on the demand for gold.

The US Dollar Index (DXY) is poised to reclaim the critical resistance level of 103.00 due to expectations that the proposal to raise the US debt ceiling will receive approval by compromising the President's spending initiatives.

House of Representatives Speaker Joseph McCarthy has prepared to raise the US borrowing limit, taking into account the compromise on further budget deficits, as a failure to do so could potentially have disastrous consequences for the US economy.

Despite the anticipation of the Federal Reserve (Fed) pausing its policy-tightening measures. A Reuters poll suggests that the current interest rate of 5.00-5.25% is expected to remain unchanged by the end of 2023.

Numerous economic indicators, including declining US inflation, easing labor market conditions, reduced retail demand, and growing concerns of an economic recession, support the case for pausing interest rate hikes.

From a technical standpoint, gold is currently undergoing a significant reversal, breaking through successive levels, which aligns with our previous analysis. The patterns we observed earlier clearly indicated a bearish outlook, and the price consolidation near the previous historical high suggested an impending decline in price.

Resi Level 3	Resi Level 2	Resi Level 1	Suppo level 1	Suppo level 2	Suppo level 3
2020	2000	1982	1973	1950	1937