Gold has been dragged below the psychologically-important $2,000 level this week due to optimism surrounding a US debt deal, while markets also ramped up bets of a Fed rate hike in June.
Although spot gold is recovering slightly after finding support around the mid-$1900s, the same region where bulls and bears did battle in early February and late March, it remains on course for its largest weekly loss since February.
From a technical perspective:
Still, it appears that the zero-yielding asset remains supported by persistent hopes that the Fed can follow through with rate cuts in Q4.
The precious metal may yet soar once more if the present optimism surrounding a US debt deal proves to be unfounded.
Although it is not the market’s base case at present, a catastrophic first-ever US default should pave the way for a new record high for gold.
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