- Gold price picks up bids to reverse the day-end pullback from six-week high.
- Risk aversion underpins XAU/USD price as banking crisis reaches Europe with Credit Suisse in target.
- United States 10-year Treasury bond yields drop the most in four months, two-year counterpart renews six-month low.
- US Dollar’s gains fail to weigh on Gold price amid mixed United States statistics.
Gold price (XAU/USD) buyers flex muscles around $1,920, after refreshing the highest levels in 1.5 months during a stellar show of Credit Suisse (CS) inflicted risk aversion the previous day. The risk profile deteriorates more as the CS episode follows the latest fallouts of Silicon Valley Bank (SVB) and Signature Bank. Given the precious metal’s haven status, the Gold buyers even ignored the jump in the US Dollar prices amid a broad downward move in the United States Treasury bond yields.
Credit Suisse drama propels Gold price via United States Treasury bond yields
With the United States banking crisis reaching the old continent Europe, via a G-SIB – a global systemically important bank, namely Credit Suisse (CS), global market players fear the return of the 2008 financial crisis and rushed for risk-safety. The risk-aversion drowned the US Treasury bond yields but propelled the Gold price, as well as the US Dollar Index (DXY).
The Saudi National Bank’s rejection of infusing more funds into Credit Suisse propelled the key European bank’s Credit Default Swaps (CDS) and triggered the crisis for the financial markets on Wednesday. On the same line was the news that the European Central Bank (ECB) officials contacted banks to ask about exposures to Credit Suisse, which in turn fanned the risk-off mood.
That said, the US 10-year Treasury bond yields dropped the most in four months before bouncing off a four-month low to 3.46% at the latest. On the same line, the US two-year bond coupons refreshed a six-month low before ending the volatile Wednesday near 3.89%.
Elsewhere, the US Dollar Index (DXY) bounced off the 50-DMA to portray the biggest daily gains in a week before ending the day at around 104.75.
It should be noted that the European stock market closed in the red but Wall Street closed mixed as the Swiss National Bank (SNB) stepped forward to help CS.
As a result, the yellow metal rallied to refresh the multi-day high earlier on Wednesday before the SNB news allowed XAU/USD bulls to take a breather.
US data fails to impress XAU/USD traders
Amid the broad fears surrounding Credit Suisse, as well as the woes of another financial crisis, traders paid little heed to the United States data.
US Retail Sales dropped to -0.4% in February versus -0.3% expected and upwardly revised 3.2% prior while the Producer Price Index (PPI) slide to 4.6% YoY from 5.7% in January and 5.6% market forecasts. Further, NY Empire State Manufacturing Index dropped to -24.6 for March compared to analysts’ estimations of -8.0 and -5.8 prior.
Even so, global rating giant Moody’s expects the Federal Open Market Committee (FOMC) to raise the federal funds rate by 25 basis points at its March 22 meeting, per Reuters.
ECB, Risk catalysts are the key
Moving on, the second-tier data surrounding employment and activities from the United States may entertain the Gold traders. However, major attention will be given to the headlines surrounding Credit Suisse and the market’s fears of another financial crisis, which in turn could keep the XAU/USD firmer. Also important to watch will be the European Central Bank’s (ECB) action considering the latest banking fiasco in the bloc.
Also read: ECB Preview: Set for 50 bps rate hike, Lagarde holds the key
Gold technical analysis
Having bounced off the 100-DMA in the last week, the Gold price crossed the 50-DMA hurdle on Monday. The follow-on corrective pullback couldn’t last long and the fresh recovery rose past the two-month-old horizontal hurdle surrounding $1,920 which holds the key for the metal’s run-up towards the Year-To-Date (YTD) high of near $1,960.
Although the Moving Average Convergence and Divergence (MACD) indicator flashes bullish signals and back the latest run-up, overbought conditions of the Relative Strength Index (RSI) line, placed at 14, suggests the bulls are running out of steam.
Hence, the XAU/USD’s further upside appears difficult but the occurrence of the same could challenge the 61.8% Fibonacci Expansion (FE) of the Gold price run-up from November 2022 to February 2023, around $2,017.
On the flip side, pullback moves remain unimpressive till the quote stays beyond the $1,900 threshold, a break of which could help the Gold sellers to aim for the 50-DMA support of $1,875.
In a case where the Gold price remains weak past $1,875, the early March high surrounding $1,858 precedes the 100-DMA support of $1,818 to challenge the XAU/USD bears.
Overall, the Gold price remains firmer but the road toward the north appears long and bumpy.
Gold price: Daily chart
Trend: Further upside expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD trades at multi-month lows below 1.0550 after US data

EUR/USD came under renewed bearish pressure and fell to its lowest level since March below 1.0550 on Wednesday. The US Dollar (USD) preserved its strength following the better-than-expected US Durable Goods Orders data, not allowing the pair to stage a rebound.
GBP/USD stays on the back foot below 1.2150

GBP/USD struggles to erase its losses and trades near the multi-month low it set below 1.2150 mid-week. The persistent US Dollar (USD) strength despite a modest improvement seen in risk mood limits the pair's rebound, while markets keep a close eye on political developments in the US.
Gold struggles to gain traction, stays below $1,900

Gold price finds it difficult to stage a rebound after dropping to a monthly low below $1,900 on Wednesday. The benchmark 10-year US Treasury bond yield holds steady near the multi-year high it set above 4.5%, making it difficult for XAU/USD to shake off the bearish pressure.
This short-term Bitcoin holder indicator forecasts another rally for BTC

Bitcoin price has been malleable to the short-term holder movements. A large spike in profits for short-term holders is almost always met by a correction in BTC.
US government shutdowns and US Dollar implications

A potential US government shutdown that could start October 1st looms, the chances of which are more or less seen as a coin flip at this point. Should a shutdown transpire, there could be a negative impact of the US Dollar.