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.
Here are the scheduled economic data and events that could move markets this week:
Monday, March 20
Tuesday, March 21
Wednesday, March 22
Thursday, March 23
Friday, March 24
It’s another tough call for central bank decision-makers as solid macro-economic data like hot inflation and decent jobs growth calls for more rate hikes and policy tightening.
Here’s what markets are expecting out of these 3 central bank meetings this week:
But the ongoing fallout from the collapse of Silicon Valley Bank and concerns around Credit Suisse mean uncertainty is high and financial conditions are tightening.
By that we mean there will be far greater caution by banks regarding who they lend to, how much they lend and at what rate. This is de-facto tightening of monetary and financial conditions as it will weigh on activity and have a lasting effect of contracting the economy.
In effect, it does the central bank’s job for it.
The risk-off environment has been to the benefit of safe haven assets such as the Japanese Yen and Gold (barring the Swiss Franc and the US dollar, which are struggling in light of their respective turmoils).
However, note that the precious metal has reached its most overbought conditions since March 2022, with its 14-day relative strength index being well above the 70 threshold.
Such levels suggest that gold may struggle to hold on to such lofty heights, and could see a technical pullback over the near future.
Note how gains very quickly unravelled following its previous two breaches of the $2k mark:
Still, as long as risk-off mode continues to dominate market sentiment, that could embolden gold bulls to revisit the $2070 peak between now and the eventual technical pullback.
Gold bugs may be further encouraged to test resistance at the 50-day SMA around $1990 if US hiring momentum is truly waning.
2 June 12:53
Spot gold is attempting to stage a slight recovery ahead of the weekend, after being dealt a further blow by Thursday’s upward revisions to US GDP.
26 May 13:51
Gold has been dragged below the psychologically-important $2,000 level this week due to optimism surrounding a US debt deal, while markets also ramped up bets of a Fed rate hike in June.
19 May 13:17
The longer that spot gold can keep its head above $2k amid sustained inflows into bullion-backed ETFs, the greater the chances of the precious metal revisiting its all-time high.
12 May 12:19
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