• As investors looked for safe-haven assets, shifting from government bonds to gold in response to rising fears about the US fiscal outlook, gold climbed toward $3340 to reach a nearly two-week high.
• Following the introduction of a proposed US federal budget that could increase the already significant deficit, risk sentiment declined. This was made worse by Moody’s recent reduction of the US credit rating because of growing debt levels and the Fed’s cautious economic outlook.
• With the continuous turmoil in the Middle East and President Trump’s apparent retreat from mediating the Russia-Ukraine issue, geopolitical tensions further increased the allure of gold.
• In the meantime, Chinese customs statistics revealed that robust demand and the central bank’s issuance of additional import quotas amid the height of US-China trade tensions caused gold imports to soar to an 11-month high of 127.5 metric tonnes in April, up 73% from March.

Technical Triggers  

• As gold has changed its momentum and moved higher above $3300 (~Rs 95500), the rally can continue towards $3380 (~Rs 97500), but prices are expected not to sustain beyond that.
• Silver prices are gaining momentum and close to their resistance level of $34(~Rs 99500). We could see a reversal if prices don’t sustain. If prices sustain above these levels, the next target would be $35(~Rs 102,000).

Support and Resistance