Gold price (XAU/USD) has stretched its recovery strongly above the psychological resistance of $2,000.00 in the Asian session. The precious metal is getting acceptance above $2,000.00 as investors are anticipating a neutral stance on interest rate guidance from the Federal Reserve (Fed) in its May monetary policy meeting after a consecutive 25 basis point (bp) interest rate hike.

Apart from that, the catalyst that is strengthening the gold price is the debt ceiling talks. Political drama for the US debt ceiling is escalating for raising it. A higher debt-ceiling proposal would force credit rating agencies to downgrade United States’ long-term credit rating, which could have a negative impact on the US Dollar and US equities. This is why the appeal for the Gold is gaining strength.

The US Dollar Index (DXY) has witnessed some buying interest after a gradual correction to near 101.35. Investors are expecting sheer volatility in the USD Index ahead of the Gross Domestic Product (GDP) (Q1) data. As per the consensus, annualized GDP data is expected to slow down to 2.0% from the prior pace of 2.6%.

On Wednesday, weak core capital goods orders due to higher interest rates from the Federal Reserve (Fed) deepened fears of an economic slowdown. Firms have postponed their expansion plans due to higher interest obligations. This might force Fed chair Jerome Powell to consider neutral guidance.