Daily Price Outlook
Gold (XAU/USD) prices dropped by over 1% on Monday, even as the dollar weakened against most major currencies, due to improving risk appetite in the markets as banking concerns diminished.
The stock market experienced a strong rebound today, with the SPDR S&P fund for local banks increasing by 3%, and First Republic bank surging by 23%. Moreover, First Citizens bank agreed to acquire Silicon Valley Bank, taking on its entire loans and private deposits.
In Europe, concerns about Deutsche Bank eased as well, with the stock recovering and the cost of insuring its debts decreasing.
Last week, the Federal Reserve raised interest rates by 25 basis points to 5% as anticipated. This marks the ninth consecutive rate hike by the Federal Reserve since initiating the current policy tightening cycle in March 2022.
The Fed maintained that the US banking system is robust and stable while forecasting tighter credit conditions for individuals and corporations in the future, which would subsequently impact economic activities and inflation.
Fed Chair Jerome Powell stated that it is unlikely for the Fed to reduce interest rates this year, but left the door open for another rate hike to bring inflation back to target levels.
Gold (XAU/USD) Intraday Technical Levels
Pivot Point: 1987
Gold (XAU/USD) – Technical Outlook
The decline in gold prices halted at the $1,944.00 area, as it began to show positive movements and tested the key resistance level of $1,962.50. This hints at an attempt to recover and reestablish the primary bullish trend, with added support from technical indicators.
Due to the current contradiction between technical factors, we prefer to remain on the sidelines until we receive a clearer signal for the next trend direction.
It's worth noting that if the price continues to rise and breaches the $1,962.50 level, it could push gold to regain its main bullish trend and aim for the $2,000.00 area as the first positive target.
However, breaking below $1,950.00 is likely to be a negative factor, prompting further bearish correction with initial targets at $1,933.20 and potentially extending to $1,909.55 upon breaking the previous level.
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