The Gold Spot Prices (XAUUSD) are currently dipping as a stronger US Dollar, and stable US Treasury yields continue to entice investors away from the non-yielding bullion. The gold spot prices are currently 0.32% lower in the Monday morning trading session as the steady greenback made the bullion more expensive for international investors.
The non-yielding bullion had recently broken through the $2000 an ounce barrier for the first time in more than a year resulting from the increased worries of a potential banking sector crisis following the collapse of two US banks. Thus, the spot prices could find support in limiting the slump as fears have not entirely been subdued. Investors are still concerned that the worst shock to the banking sector since the infamous 2008 global financial crisis has not been fully contained, and a credit crunch could push the US economy towards a recession.
Technical
Following a breakout below the ascending channel, the spot prices tested the support level at the 38.20% Fibonacci level at $1934.34 an ounce and retracing and retesting the resistance level of $2010.39 an ounce before another pullback. The failure to break through the resistance level brought the 23.60% Fibonacci level into play, which will likely determine the spot price movement in the short term.
If the spot price substantially moves below the 23.60% Fibonacci level, the bears could be confident that the selling momentum to push the price down in the short term. Thus the bears could be looking at the support level at $1934.34 an ounce for a potential short-term trading opportunity. A breakthrough below the initial support level, supported by significant volume, could signal the presence of sellers. The selling momentum could push the spot price towards the support level at $1910.85 an ounce.
If the spot price fails to break through and substantially move below the 23.60% Fibonacci level, the bulls could be confident in their rally to retest the resistance level at $2009.80, a level of interest for the bulls. If the spot price breaks above the initial resistance level, supported by volume, then bulls could have their target firmly zoomed in to the 8th of March 2022 high of $2051.51 an ounce.
Summary
The fears of a global financial crisis and a potential accelerated recession could drive demand for the non-yielding bullion in the longer term. However, in the shorter term, the precious yellow metal could be subdued by the strengthening of the greenback and the improvement of investors’ appetite for riskier assets. Thus, in the short term, investors could look at $1934.34 an ounce as a possible level of interest.
Sources: TradingView, Reuters, Dow Jones Newswires, Seeking Alpha.
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