- Gold price catches fresh bids on Friday and steadily climbs back closer to a multi-week top.
- Concerns about a full-blown global banking crisis seem to benefit the safe-haven commodity.
- Bets for a less aggressive Federal Reserve, a weaker US Dollar also lend support to the metal.
Gold price regains some positive traction following the previous day's good two-way price moves and maintains its bid tone through the early European session on Friday. The XAU/USD is currently placed just above the $1,930 level, up over 0.60% for the day, and remains well within the striking distance of a six-week high touched on Wednesday.
Banking crisis woes continue to benefit Gold price
Despite multi-billion-dollar lifelines for troubled banks in the United States (US) and Europe, concerns about widespread contagion continue to drive some haven flows and benefit Gold price. It is worth mentioning that large US banks came to the rescue of troubled First Republic Bank and injected $30 billion into the California, San Francisco-based lender on Thursday. This followed Credit Suisse's announcement that it will exercise an option to borrow up to $54 billion from the Swiss National Bank (SNB) to shore up liquidity. The developments, however, fail to boost investors' confidence or ease fears of a full-blown global banking crisis, which is evident from the prevalent cautious market mood.
Bets for less hawkish Federal Reserve, weaker US Dollar also lend support
Furthermore, last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank - forced traders to scale back expectations of more aggressive interest rate hikes by the Federal Reserve (Fed). In fact, the markets are now pricing in a nearly 90% chance of a smaller 25 bps lift-off at the upcoming Federal Open Market Committee (FOMC) meeting on March 21-22. This, in turn, leads to a modest downtick in the US Treasury bond yields and lends additional support to the non-yielding Gold price. Meanwhile, expectations for a less hawkish Fed prompt fresh selling around the US Dollar, which turns out to be another factor acting as a tailwind for the US Dollar-denominated commodity.
Gold price is poised for the biggest weekly gains since mid-November
The aforementioned supportive fundamental backdrop suggests that the path of least resistance for Gold price is to the upside. Nevertheless, the XAU/USD remains on track to register its biggest weekly gain since mid-November and seems poised to prolong the recent appreciating move witnessed over the past two weeks or so. Market participants now look to the release of the Michigan US Consumer Sentiment Index for some impetus later during the early North American session on Friday. The focus, however, will remain on the two-day FOMC meeting, starting next Tuesday.
Gold price technical outlook
From a technical perspective, any subsequent move beyond the $1,937-$1,938 region, or the weekly swing high, is likely to confront some resistance near the multi-month top, around the $1,959-$1,960 area touched in February. Some follow-through buying will be seen as a fresh trigger for bullish traders and allow Gold price to aim towards reclaiming the $2,000 psychological mark.
On the flip side, immediate support is pegged near the $1,920-$1,918 horizontal zone, ahead of the overnight swing low, around the $1,908-$1,907 region. This is followed by the $1,900 round figure, which if broken might prompt some technical selling and drag the XAU/USD to the $1,886-$1,885 area en route to the $1,872-$1,871 support, or the weekly low set on Monday.
Key levels to watch
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
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Optimism price could fall as nearly $90 million worth of OP tokens is due flood markets
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.