Gold price bulls are aiming for $1,890, amid softer US Dollar and falling yields

XAU/USD is surging higher in the last four days and is up around 1% on the day. Falling US Treasury yields have fueled the Gold price higher as the market is scaling out for any 50 bps rate hike possibility for the March FOMC Meeting.

XAU/USD benefited amid the softer US Dollar earlier in the Asian session due to the Federal Reserve (Fed) and the US Treasury intervening in the banking system to rescue the Silicon Valley Bank (SVB) and Signature Bank. 

Given the fact that surging borrowing cost across and United States (US) is denting financial health, as a result, the market has encountered the SVB fallout. 

XAU/USD is showing some strong upward momentum in the wake of falling yield since Gold price is inversely correlated with US Treasury yields – as Gold is sensitive to the shorter end of the yield curve.

A heavy fall in the shorter end of the yield curve occurred last Friday after the Nonfarm Payrolls (NFP) release. The added jobs number was higher than expected while the Unemployment Rate rose to 3.6%. The market interpretation of Friday’s NFP is to look cautious and flurry. The fact that yields are heading lower across the board, especially the shorter end of the US Treasury yield curve, is putting heavy pressure on the US Dollar as well as equity complexes across the globe. 

On the data docket, the United States economic calendar will feature the Consumer Price Index (CPI) data on Tuesday, but it looks like the market is heading into the upcoming CPI event with red eyes. We are already in the Fed’s blackout period, therefore market dynamics will likely remain fragile until the 22 March FOMC Meeting.  

Gold price key levels to watch 

Gold price is looking to break above March’s high at the $1,894 mark. A convincing break above will lead the price toward the $1,900 key psychological mark. Any downside will likely be capped around Monday’s low at $1,866.