Reasons for the high price of gold today and technical analysis of the levels of support and resistance

Gold prices maintain their gains during Monday’s trading, as they traded near the upper limit of their daily scope at the level of 3,250 dollars an ounce during the European session, after severe fluctuations in the market. Gold derives its support from a sudden reduction in the credit rating of the United States, which strengthened the demand for safe havens amid the escalation of concerns about the prospects for the American economy and the sustainability of its financial conditions.

The most prominent factors affecting gold prices today:

• Reducing the credit rating of the United StatesMoody’s has reduced the American sovereign classification to one degree to “AA1”, indicating anxiety of public debt enlargement. This comes in conjunction with the approval of a committee in Congress on the project to reduce taxes submitted by President Trump, which may increase the debt burden by billions of dollars.

• Continuous trade tensions: The US Treasury Secretary, Scott Payette, renewed Trump’s threats to impose customs definitions on unidentified commercial partners, which increased the attractiveness of gold as a safe haven.

• Weak economic dataInflation data (CPI and PPI) showed signs of inflationary pressures, while retail sales fell, which strengthened expectations of economic slowdown for several quarters to come.

• Consumer confidence declinedMichigan University surveyed a decrease in consumer confidence index to 50.8 in May, the lowest level since June 2022, which supported expectations by reducing the interest rate twice this year by the Federal Reserve.

• Weak US dollarThe continued decline in the dollar due to the expectations of the facilitatical monetary policy support for gold prices, especially as it is an indispensable origin of return.

• Geopolitical tensionsDevelopments in the Middle East and Ukraine continue to support gold, with the continued geopolitical risks to influencing the markets.

Technical analysis of gold:

Technically, according to the “FXSTREET” platform, gold faces strong resistance in the average, which has turned into a resistance level. Any clear penetration above the range of 3,250-3,252 dollars may confirm the end of the rising correction and open the door to the rise of about 3,275 and then 3,300 dollars, which is a pivotal level that may change the general trend towards climb.

On the other hand, breaking the level of $ 3,200 may push gold to drop about 3,178-3,177, then about 3,120 as the lowest level since April 10, before heading to the main support at $ 3,060.