Gold Price Forecast: XAU/USD scales above $1,910 as SVB fallout limits Fed’s tightening pace


  • Gold price has delivered a three-day winning streak on hopes of a slowdown in the Fed’s policy tightening pace.
  • Going forward, a sheer volatility is expected ahead of the US inflation data.
  • A decisive break above 61.8% Fibo indicates that the asset will recapture the previous swing high ahead.

Gold price (XAU/USD) has refreshed its five-week high at $1,914.70 in the early Asian session. The precious metal has delivered a three-day winning streak and is expected to continue its upside momentum as a sudden collapse of Silicon Valley Bank (SVB) might force the Federal Reserve (Fed) to continue a lower pace of policy tightening if not halt the restrictive regime.

President Joe Biden said the administration's swift actions to ensure depositors can access their funds in Silicon Valley Bank (SVB) and Signature Bank (SBNY) should give Americans confidence that the U.S. banking system was safe, as reported by Reuters.

The US Dollar Index (DXY) has sensed an intermediate cushion around 103.50, however, sheer volatility is expected ahead as investors will keep an eye on the United States Consumer Price Index (CPI) data.

Analysts at Credit Suisse expect “Expect core CPI inflation to remain steady at 0.4% MoM in February, causing the YoY reading to tick down to 5.5%. Energy and food prices are likely to moderate, with headline inflation also coming in at 0.4% MoM. A reading in-line with our expectations would be uncomfortably high for the Fed, but still consistent with gradual disinflation this year.”

S&P500 futures are showing marginal gains after a subdued Monday, a case of a dead cat bounce, however, the risk sentiment is still negative. The 10-year US Treasury yields dropped to 3.54% as Fed chair Jerome Powell won’t go heavy on interest rates to maintain consumer confidence in the economy.

Gold technical analysis

Gold price has scaled above the 61.8% Fibonacci retracement (placed from February 2 high at $1,959.71 to February 28 low at $1,804.76) at $1.901.24. A decisive break above 61.8% Fibo indicates that the asset will recapture the previous swing high ahead.

Upward-sloping 20-and 50-period Exponential Moving Averages (EMAs) at $1,900 and $1,883.00 add to the upside filters.

The Relative Strength Index (RSI) (14) oscillates in the bullish range of 60.00-80.00, which indicates an upside momentum is already active. However, some corrections due to an overbought situation cannot be ruled out.

Gold two-hour chart

XAU/USD

Overview
Today last price 1911.37
Today Daily Change 41.45
Today Daily Change % 2.22
Today daily open 1869.92
 
Trends
Daily SMA20 1835.48
Daily SMA50 1871.07
Daily SMA100 1810.46
Daily SMA200 1775.06
 
Levels
Previous Daily High 1870.09
Previous Daily Low 1827.77
Previous Weekly High 1870.09
Previous Weekly Low 1809.46
Previous Monthly High 1959.8
Previous Monthly Low 1804.76
Daily Fibonacci 38.2% 1853.92
Daily Fibonacci 61.8% 1843.94
Daily Pivot Point S1 1841.76
Daily Pivot Point S2 1813.61
Daily Pivot Point S3 1799.44
Daily Pivot Point R1 1884.08
Daily Pivot Point R2 1898.25
Daily Pivot Point R3 1926.4

 

 

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