Spot gold has skyrocketed towards its biggest weekly gain since November as contagion fears permeated global financial markets this week.
The Credit Suisse crisis exacerbated the risk-off sentiment stemming from Silicon Valley Bank’s collapse, prompting market participants to rush towards safe haven assets.
The precious metal launched above its 50-day simple moving average (SMA) and is on course towards revisiting its year-to-date high.
However, with gold’s 14-day relative strength index (RSI) teasing its way into “overbought” territory, should the RSI cross above the 70 mark, that may prompt traders into invoking a technical pullback for spot gold.
As long as markets continue doubting the integrity of the global financial system, such concerns should keep the precious metal well bid.
We expect a greater-than-even chance of spot gold staying above the psychologically-important $1900 in the lead up to next week’s FOMC meeting, provided that the US dollar remains subdued and risk-off mode remains in place.
If Fed Chair Jerome Powell can swat away contagion fears at next week’s press conference, while convincing markets that the Fed can press ahead with its aggressive battle against still-stubborn inflation, that may unwind some of gold’s recent gains.
A shift in the current risk-off narrative could see the precious metal testing its 50-day simple moving average for support next week.
Gold’s recent crawl back up closer to $2k is awaiting validation from the US PCE core deflator due later today. Further evidence of still-sticky US inflation, with another 4.7% print that matches January’s number, may force bullion bulls to wait a while longer before reclaiming the $2k handle.
31 March 12:24
Spot gold is once again easing away from the $2000 handle, after having twice this week briefly surfaced above that psychologically-important mark. From a technical perspective, gold appears to be clearing even more froth as its 14-day relative strength index pulls back once more from the 70 threshold which marks “overbought” conditions.
24 March 12:19
Gold has broken above the psychologically-important $2k for the first time since March 2022 (following Russia’s invasion of Ukraine)! And gold could stay supported this week, as major central banks hold their respective policy meetings amid the market tumult and banking crisis engulfing both sides of the Atlantic.
20 March 10:41
A lower-than-expected NFP headline figure today, which suggests that January’s blockbuster number was a fluke, is likely to restore spot gold back above $1850. However, a stronger-than-expected February NFP print which ramps up market fears for an even-more aggressive Fed may drag spot gold back closer to the $1800 mark.
10 March 12:34
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