Forex world

March 20, 2023

XAU/USD ticks up to renew YTD high near $2,000

- Gold price picks up bids to reverse the early-day losses within one-week-old bullish channel.

- Global central banks’ moves to infuse US Dollar liquidity, UBS-Credit Suisse deal earlier favored risk-on mood.

- Details of efforts to push back fears from banking sector fallout appear less lucrative amid hawkish central bank bias.

- Woes for Credit Suisse bondholders, cautious mood ahead of top-tier data/events weigh on sentiment.

Gold price (XAU/USD) ticks up to $1,993 as it renews the yearly high during Monday’s European session, reversing the Asian session’s losses amid fresh challenges to the risk appetite. It’s worth noting that the metal rose the most on a daily, as well as on a weekly, basis in the last amid broad weakness of the US Treasury bond yields and the US Dollar.

The latest run-up of the yellow metal could be linked to the fears of banking sector rout despite the efforts of the major central banks and private banks. Also challenging the sentiment are the fears of more rate hikes, as well as negative results of a deal between Credit Suisse and UBS.

That said, news surrounding the major central banks’ coordinated efforts to fuel the market’s liquidity joined the headlines suggesting the UBS takeover of the troubled Credit Suisse to underpin the recovery in the sentiment during the early Asian session.

Though, the details of the UBS-Credit Suisse deal suggest losses for the Credit Suisse AT1 bondholders, which in turn probed the weak-start optimism. On the same line are the interest rate futures that suggest the upcoming hawkish actions from the key central bank. It should be noted that the fears of more banking sector fallout also weigh on the US Treasury bond yields and allow the Gold price to remain firmer.

Against this backdrop, the S&P 500 Futures reverse the week-start gains while the US 10-year and two-year Treasury bond yield retreat towards multi-day lows marked the previous day. It’s worth noting that United States two-year Treasury bond yields marked the biggest weekly loss in three years while the 10-year counterpart dropped the most since early January.

Looking forward, risk catalysts and the bond market moves could entertain the Gold traders ahead of the monetary policy meetings of the Federal Reserve (Fed), Swiss National Bank (SNB) and the Bank of England (BoE). Also important to watch will be the March month’s first readings of activity numbers for the major economies.

Gold price technical analysis

Gold buyers took a breather during early Monday as the RSI (14) turned overbought. The pullback moves, however, failed to break the previous resistance line from March 13, close to $1,965 by the press time.

In doing so, the XAU/USD remains inside a one-week-old bullish trend channel amid upbeat MACD signals.

As a result, the metal’s upside toward refreshing the Year-To-Date high can’t be ruled out.

However, the stated bullish channel’s top line and the April 2022 high, respectively near $1,996 and $1,998, will precede the $2,000 psychological magnet to challenge the Gold buyers.

Following that, a run-up towards the previous yearly peak surrounding $2,070 can’t be ruled out.

Alternatively, pullback moves need validation from the $1,965 but the Gold seller may feel relived only if the XAU/USD price remains bearish past the $1,942-40 support confluence, encompassing the aforementioned channel’s lower line and the 50-Hour Moving Average (HMA).

Gold price: Hourly chart

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