Daily Price Outlook
The price of gold, XAU/USD is now trading around 1,903. After dropping from a six-week high in the previous session, gold prices continued to decline on Wednesday as fears over a banking crisis in the country faded, and a mixed figure on US inflation created some confusion over the Federal Reserve's attitude on monetary policy.
Bank Crisis Subsides
In the last few days, the collapse of American banks caused a rush toward safe havens, which caused the price of yellow metal to rise rapidly. However, following the failure of the Silicon Valley Bank, the US government took action to reaffirm public confidence in the banking industry.
The Fed moved quickly to loosen restrictions on bank borrowing. The White House also assured SVB depositors that it would cover withdrawal costs.
Therefore, when concerns about the banking sector spread following the collapse of SVB last week faded, investors surged into stocks in US markets overnight, and gold prices were on edge.
US Inflation has Slowed
Meanwhile, the Consumer Price Index (CPI), which measures inflation in the US, eased. The US CPI and CPI ex Food and Energy met 6.0% and 5.5% YoY market predictions, below 6.4% and 5.6% respective prior readings.
After the CPI report, Reuters said that a government report showed US inflation stayed high in February, and fears of a long-term financial crisis faded. Therefore, the Federal Reserve might raise its benchmark rate by a quarter percentage point next week and again in May.
The US Dollar Index (DXY) picked up bids to retest the intraday high of 103.76 after the news that the Fed might raise its benchmark rate. That puts downward pressure on the price of gold. The yield on 10-year US Treasury bonds increased to 3.678%.
The hawkish Fed wagers and positive US Treasury bond rates enable the US Dollar to maintain its strength and provide XAU/USD bears reason for optimism.
Gold (XAU/USD) Intraday Technical Levels
Pivot Point: 1904
Gold (XAU/USD) – Technical Outlook
The price of gold experienced a temporary negative pressure, causing it to settle within the bullish pennant's pattern once again. However, new positive signals from the stochastic indicator are expected to motivate the price to continue its bullish trend for the day, with the next target located at $1,928.60.
As such, we maintain a bullish outlook, provided that the price remains stable above $1,878.80. Any continued decline and a breach of this level may lead to further losses, potentially reaching the $1,828.70 areas.
For today's trading, we anticipate a trading range between support at $1,890.00 and resistance at $1,928.00.
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