Gold Technical Analysis: Gold Price is Trying to Maintain its Gains

With the start of this week's trading, XAU/USD gold futures rose as investors sought shelter in metallic commodities as investors absorbed the latest developments related to the collapse of Silicon Valley Bank, Signature Bank and Silvergate. With changing expectations that the Federal Reserve will change the course of US interest rates, investors flocked to the yellow metal. Gold's gains extended to the $1915 resistance level, the highest price in five weeks.

Gold price XAU/USD is now settling around the psychological resistance level of $1900 an ounce, waiting for any new news. Since the start of trading in 2023 to date, the price of gold has increased by more than 4%.

In the same performance, silver prices, the sister commodity to gold, enjoyed a significant rise at the beginning of the trading week. Silver futures advanced 6.9%, to $21.92 an ounce. Despite the impressive performance, silver prices are still down nearly 10% over the year. In general, investors were attracted to the attractiveness of gold as a safe haven, as investors took protection even though US President Joe Biden assured everyone that the US banking system remains safe. In the end, gold and silver were among the few assets that benefited from the banking crisis.

The gold market ostensibly took advantage of a weaker US dollar and Treasury yields.

The US Dollar Index (DXY), a measure of the greenback against a basket of other major currencies, fell below 104.00. The two-year Treasury yield fell to less than 4% before regaining its losses. A weaker price is beneficial for dollar-denominated commodities because it makes them cheaper for foreign investors to buy. Moreover, the price of gold is generally sensitive to fluctuations in interest rates because they can affect the opportunity cost of owning non-yielding assets.

Meanwhile, the next major event will be after the February Consumer Price Index (CPI) report. The announcement of the retail sales numbers and reading the producer price index, the reaction from that data and the developments on the ground about the future of the US financial system will determine the direction of the US dollar.

  • The general trend is still bullish and the stability is above the $1900 resistance per ounce, confirming this.
  • According to the performance on the daily chart below, its recent gains moved the technical indicators towards overbought levels.
  • Unless gold gets a new rapid stimulus, it may be subject to profit-taking sales at any time.

If these operations occur, the XAU/USD gold price may move towards the support levels 1885 and 1870 dollars an ounce again. On the other hand, the move towards the resistance levels at $1935 an ounce will be important for the bulls to have strong and continuous control over the trend. I still prefer to sell gold from every level up. In fact, the US Federal Reserve is in dangerous territory. It can either continue to raise interest rates and threaten the banking system, or it can pause interest rate hikes, bail out financial institutions, and keep inflation at bay.

In other metals markets, copper futures rose to $4.05 a pound. Platinum futures added 4.4% to $1,004.90 an ounce. Palladium futures rose to $1,476.70 an ounce.

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Mahmoud Abdallah
Mahmoud has been working fulltime in the Foreign Exchange markets for 12 years. Offers his analysis, articles and recommendations at the most renewed Arabic websites specialized in the global financial markets, and his experience gained a lot of interest among Arab traders. Works on providing technical analysis, market news, free signals and more with follow up for at least 12 hours a day, and aims to simplify forex trading and the concept of trading for his audience.