Daily Price Outlook
The price of gold, XAU/USD, is currently trading around $1,988. On Monday, amidst growing concerns about a financial crisis, gold prices moved slightly below their highest levels in 11 months as markets assessed the influence of the Federal Reserve and other major central banks' emergency liquidity measures.
Gold as a Safe-Haven Asset: How Recent Market Turmoil is Affecting XAU/USD?
Several major central banks, including the Federal Reserve and the European Central Bank, have announced additional measures to provide liquidity to the banking industry and prevent any potential spillover from the recent failures of several institutions.
Additionally, a deal supported by regulators saw troubled lender Credit Suisse Group AG acquired by Swiss competitor UBS Group AG.
The Federal Reserve's expanded liquidity policies mark a reversal of a year of monetary tightening aimed at combating inflation and are expected to support strong demand for gold.
The recent turmoil in the banking sector has fueled safe-haven demand for gold, leading to an increase in the XAU/USD price.
Focus on Fed Monetary Policy and Its Impact on Gold Prices
Meanwhile, the deal between UBS and Credit Suisse has reduced the demand for US government bonds. The expectation of additional market liquidity has boosted the recent increase in US government bond rates and supported the recovery of the US dollar while putting pressure on gold prices.
The US Dollar Index (DXY) is currently trading sideways at 103.80, while the yield on US 10-Year Bonds has risen to 3.414%.
Investors are now awaiting Wednesday's Federal Reserve (Fed) interest rate announcement. Despite recent unrest and concerns in the banking sector, several analysts predict that Fed Chair Jerome Powell will raise rates by 25 basis points (bps).
A potential rise in the price of gold could occur if the US Federal Reserve indicates caution about future rate increases or holds off on current increases. However, any hawkish remarks from the Fed are likely to cause XAU/USD to decline.
Gold Price Chart - Source: Tradingview
Gold (XAU/USD) Intraday Technical Levels
Pivot Point: 1981
Gold (XAU/USD) – Technical Outlook
The gold price achieved new strong rises to surpass our waited target at $1,960.00 and approach the psychological barrier at $2,000.00, which supports the continuation of the bullish trend on the intraday and short-term basis, noting that surpassing the mentioned barrier will push the price to head towards $2,040.00 areas as a next main station.
The EMA50 provides continuous positive support to the price, while stochastic negativity might cause some temporary bearish bias before resuming the bullish bias.
In general, we suggest the continuation of the overall bullish trend domination, and the price needs to hold above $1,960.00 as a first condition to continue the expected rise, as breaking it will press on the price to achieve some intraday bearish correction before turning back to rise again.
The expected trading range for today is between $1,960.00 support and $2,000.00 resistance.
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