The fears of a potential banking crisis continue to keep the volatility of the Gold Spot (XAUUSD) price at elevated levels as regulators fail to completely subdue the concerns. The spot price is currently trading 0.31% lower during the trading session on Wednesday as the easing of the fears around the global banking industry sent investors towards riskier assets. However, the decline might be short-lived as some investors could still find value in the non-yielding bullion as a potential hedge against the likely economic uncertainties in the near term.
The non-yielding bullion’s bulls confidence could primarily be driven by the prevalent financial uncertainty but could face increased pressure from the bears in the coming weeks if macroeconomic reports suggest that economic data and inflation remain higher in the US. With major economies’ central banks echoing prioritizing the fight against inflation over the potential banking system stress, investors might expect the Federal Reserve to follow suit, which could negatively impact the gold spot price in the future.
Technical
The 4H chart shows that the price action of the precious yellow metal is currently trading around the 50-day moving average and 23.60% Fibonacci level at $1962.78 an ounce. The market could be looking at the price action movement around the $1962.78 an ounce level, a level of interest, for a potential direction of the price action in the short term.
For the bearish sentiment, a sustained move below the level of interest could indicate the presence of buyers. The bears could look to the support level at $1934.22 an ounce for a potential short-term trading opportunity. The bears could be looking to increased volume when the price action breaks through the initial support level to confirm the selling momentum, which could potentially trigger a move towards the lower support level of $1909.64 an ounce. A lack of substantial volume could possibly push the price action back above the $1934.22 an ounce support level.
A substantial move above the $1962.78 an ounce level could signal the presence of buyers and, potentially, a continuation of the primary upward trend. A trading opportunity could exist as the price action breaks through the resistance level at $1988.64 an ounce, a level of interest for the bulls. With the spot price having had trouble moving substantially above the resistance level at $1988.64 an ounce, the significant volume should accompany the breakthrough if the bulls look to test the next major level at the 12-month high at $2009.80 an ounce.
Summary
The easing of the banking crisis fears might have helped limit the yellow precious metal rally. However, with the concerns not thoroughly subdued, the volatility surrounding the gold spot price will remain elevated. Thus, a short-term trading opportunity could exist as the price action substantially moves away from the 23.60% Fibonacci level, even though there is a possibility that the move could be short-lived in the short term.
Sources: TradingView, Reuters.
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