Gold Price Forecast: XAU/USD spikes to fresh multi-week top amid risk-off, tumbling US bond yields

Gold price regains strong positive traction on Friday and rallies to its highest level since February.
Fears of a global banking crisis weigh on investors’ sentiment and lift the safe-haven XAU/USD.
Bets for a less hawkish Fed, tumbling US bond yields, a weaker USD provide an additional boost.

Haresh Menghani FXStreet

Gold price catches fresh bids following the previous day's directionless price action and builds on its intraday positive move through the early North American session. The XAU/USD spikes to a fresh six-week high, around the $1,946 region, in the last hour and remains on track to register its biggest weekly gain since mid-November.

A fresh wave of the global risk-aversion trade - as depicted by renewed selling around the equity markets - boosts demand for traditional safe-haven assets and benefits Gold price. Despite multi-billion-dollar lifelines for troubled banks in the United States (US) and Europe, investors are still trying to determine whether the risk of a full-blown global banking crisis has been tamed and remain concerned about the widespread contagion. Adding to this, looming recession risks take a toll on the risk sentiment and drive haven flows towards the precious metal.

Furthermore, a steep decline in the US Treasury bond yields is seen as another factor that benefits the non-yielding Gold price and remains supportive of the strong intraday rally. The anti-risk flow, along with rising bets for a smaller 25 basis points (bps) rate hike at the upcoming Federal Open Market Committee (FOMC) meeting on March 21-22, drag the US bond yields lower. Investors now seem convinced that the Fed will adopt a less hawkish stance in the wake of last week's collapse of two mid-size US banks - Silicon Valley Bank and Signature Bank.

Meanwhile, diminishing odds for more aggressive policy tightening by the US central bank, along with tumbling US bond yields, keep the US Dollar (USD) depressed for the second straight day. A weaker Greenback provides an additional boost to the US Dollar-denominated Gold price, taking along some short-term trading stops near the previous weekly/monthly high around the $1,937 area. This might have already set the stage for a further near-term appreciating move towards the $1,959-$1,960 region, or the multi-month top touched in February.

Technical levels to watch

XAU/USD

Overview
Today last price	1949.52
Today Daily Change	30.01
Today Daily Change %	1.56
Today daily open	1919.51

Trends
Daily SMA20	1849.04
Daily SMA50	1877.18
Daily SMA100	1820.71
Daily SMA200	1776.37

Levels
Previous Daily High	1933.51
Previous Daily Low	1907.56
Previous Weekly High	1870.09
Previous Weekly Low	1809.46
Previous Monthly High	1959.8
Previous Monthly Low	1804.76
Daily Fibonacci 38.2%	1923.6
Daily Fibonacci 61.8%	1917.47
Daily Pivot Point S1	1906.88
Daily Pivot Point S2	1894.24
Daily Pivot Point S3	1880.93
Daily Pivot Point R1	1932.83
Daily Pivot Point R2	1946.14
Daily Pivot Point R3	1958.78

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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