Gold Technical Analysis: Gold Price is Still the Strongest

  • XAU/USD gold futures surpassed the historical psychological resistance barrier of $2000 an ounce.
  • Gains reached the level of $2009 an ounce, before prices settled around the $1970 level at the time of writing the analysis.
  • The gains of the gold market were primarily supported by the weakness of the US dollar, the banking crisis, and changing expectations regarding interest rates.

The yellow metal pared most of its gains on Monday, but the renewed bullishness has been striking for the precious metal this month. All in all, XAU/USD gold prices are up 7% so far this month, pushing their year-to-date gains beyond 8%.

Gold futures exceeded $2,014 in intraday trading.

In the same performance, the price of silver, the sister commodity to gold, is looking to touch $23 this week. Silver futures rose to $22.63 an ounce. The price of the white metal also rose by more than 4% this month, reducing its decline since the beginning of the year 2023 to date to less than 7%.

In general, the metals market rose during the banking crisis, as investors tried to seek shelter during the financial chaos. Investors predict that there will even be small and mid-sized banks that need a bailout, requiring bailouts from the Fed, FDIC, Treasury, and big banks. Market experts say they will monitor demand and investment volumes for gold-focused exchange-traded funds (ETFs).

There are now fears that UBS could run into financial trouble over its purchase of Credit Suisse, as credit default swaps are at an 11-year high. Despite the liquidity infusion, investors are still worried about First Republic Bank. All eyes will be on the US Federal Reserve meeting this week. The futures market is mostly heading for the Federal Open Market Committee (FOMC) to raise US interest rates by 25 basis points.

XAU/USD is usually sensitive to interest rate fluctuations because it affects the opportunity cost of holding non-yielding bullion. Meanwhile, the dollar's weakness supported gold prices. The US Dollar Index (DXY), which measures the greenback's performance against a basket of other major currencies, fell to 103.31, from an opening of 103.71. Overall, the index has turned negative over the year, despite last week's rise. A lower amount is good for dollar-denominated commodities because it makes them more expensive for foreign investors to buy.

In other metals markets, copper futures rose to $3.965 a pound. Platinum futures rose to $994.90 an ounce. Palladium futures advanced to $1413.00 an ounce.

XAU/USD gold price forecast today:

The general trend of the XAU/USD gold price is still bullish. Its recent gains were sufficient to push the technical indicators to strong overbought levels. However, in the event of the continuation of the global banking crisis, the spread of infection, and the weakness of the dollar, prices may guarantee more gains. On the other hand, if fears subside and the crisis passes, the price of gold may be exposed to strong, rapid selling operations. The closest support levels for prices are currently 1965 and 1935, and the bears will not be able to control without moving towards the $1885 support level, according to the performance on the daily chart below.

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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.