Technical Analysis

GOLD Price Analysis – March 16, 2023

By LonghornFX Technical Analysis
Mar 16, 20233 min

Daily Price Outlook

The XAU/USD is currently trading at 1,910.42, indicating a 0.41% decrease within a day. On Thursday, the price of gold fell from its six-week high as speculators cashed in on gains. However, the yellow metal's status as a safe haven asset was strengthened by fears of an impending financial crisis and uncertainty regarding monetary policy.

Credit Suisse Crisis Sparks Risk Aversion and Impacts Gold Prices

Global market participants are currently concerned about a potential repeat of the 2008 financial crisis as the US banking crisis has now reached Europe and affected Credit Suisse (CS), which is considered to be a bank with significant worldwide systemic importance.

Following the announcement on Wednesday that Credit Suisse's top investor would not provide the Swiss bank with more financial support, global stocks, including Credit Suisse's shares, experienced a decline.

The refusal of the Saudi National Bank to invest additional funds in Credit Suisse led to an acceleration in the leading European bank's Credit Default Swaps (CDS), which then caused a financial market crisis.

Furthermore, news that representatives of the European Central Bank (ECB) approached banks to inquire about their exposure to Credit Suisse only added to the already existing risk-off sentiment.

When the banking crisis spreads to Europe and targets Credit Suisse, investors tend to opt for safe-haven assets like gold, causing the price of XAU/USD to increase. However, as investors began to take profits, gold prices dipped from their six-week high.

Fed Rate Hike Speculations and Their Impact on Gold Prices

Traders showed little interest in US statistics amidst growing concerns about Credit Suisse and the possibility of a new financial crisis.

US retail sales fell by 0.4% in February, below market expectations of 0.3% and a downward revision from the prior month's figure of 3.2%. The Producer Price Index (PPI) also decreased from 5.7% in January to 4.6% YoY, falling short of the market projection of 5.6%.

The data shows a noticeable drop in US inflation, which has lowered expectations of a hawkish stance by the Federal Reserve (Fed). Nevertheless, Reuters reports that the Federal Open Market Committee (FOMC) is still expected to raise the federal funds rate by 25 basis points at its meeting on March 22.

As traders anticipated further Federal Reserve interest rate increases, Treasury rates rose to 3.489%, and the DXY rebounded to 104.57, putting pressure on XAU/USD.

 Gold Price Chart - Source: Tradingview

Gold (XAU/USD) Intraday Technical Levels

Support      Resistance

1890            1942

1862            1965

1838            1993

Pivot Point: 1914

Gold (XAU/USD) – Technical Outlook

The gold price encountered substantial resistance at $1,929, trading with clear negativity and retesting the breached resistance for the bullish pennant's pattern, which was influenced by stochastic negativity. Hoping for favorable momentum to help push the price back into the main bullish wave, which has its next objective of $1,962.00.

The EMA50 continues to support the projected bullish trend, and a break of $1,929 is needed to ease the goal of reaching the desired level.

But, breaking $1,906.00 will put the price under extra downward pressure, causing it to test the most significant support at $1,878.80 before any new attempt to rise.

Today's trading range is predicted to be between $1,894.00 support and $1,936.00 resistance.



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