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Gold futures basis the most active June 2023 Comex contract traded briefly below the 100-day simple moving average at $1939.50. Gold futures traded to a low of $1939 just $0.50 below its 100-day moving average which technical traders use as a benchmark to determine the interim trend of a stock or commodity. As of 5:00 PM EDT, the June contract is currently down $22.90 or 1.17% and fixed at $1941.70.
With just one day left before the United States begins a three-day holiday weekend in honor of Memorial Day, both Republican and Democratic leaders have expressed optimism that current negotiations will lead to a deal with legislation that raises the debt ceiling before the XDate occurs.
According to Reuters News, "U.S. President Joe Biden and top congressional Republican Kevin McCarthy on Thursday appeared to be nearing a deal to cut spending and raise the government's $31.4 trillion debt ceiling, with little time to spare to head off the risk of default."
A source cited by Reuters says that "the two sides are just about $7 billion apart on a total figure that would be well over $1 trillion".
A potential upcoming deal that would resolve the debt ceiling crisis has pressured gold dramatically lower now for the fourth consecutive day. Gold futures have declined almost $40 from Friday’s opening price of $1978 down to its current fix just below $1942 per ounce.
On a technical basis gold breached a Fibonacci 50% retracement today of $1947.80. The data set used for this retracement begins at $1810 (the lows that occurred in February of this year) to $2085. Gold’s 100-day moving average at $1939.50 was breached in trading today and becomes the first level of potential technical support. Below that the next level of technical support for gold futures at $1915 per ounce, which represents a 61.8% Fib retracement.
Gary Wagner
Contributing to kitco.com
