Gold Price Forecast XAU/USD – Jumps More than 2% as Treasury Yields Plunge 18 Basis Points

Gold prices are up nearly 2% late in the session on Friday. The surprise rally is being fueled by a steep slide in U.S. Treasury yields, a weak U.S. Dollar and a plunge in higher risk assets as worries over a fallout in the banking sector offset a strong U.S. jobs report.

At 18:03 GMT, April Comex gold futures are trading $1868.60, up 34.0 or +1.85% and the XAU/USD is at $1863.62, up $32.05 or +1.75%.The SPDR Gold Shares ETF (GLD) is trading $173.34, up $3.14 or +1.86%.

Biggest Bank Failure Since 2008

Yields dropped and the dollar as well as the failure of tech-focused lender Silicon Valley Bank (SVB) pressured the broader banking sector and the major U.S. stock indexes.

The FDIC took control of Silicon Valley Bank’s deposits, after shares tumbled Thursday when the bank announced plans to raise more than $2 billion in capital in a bid to offset losses from bond sales.

SVB Plunge Erases Better-than-Expected Labor Market News

The turmoil among bank stocks overshadowed a February jobs report, which gave some hints that inflation could be slowing. Payrolls increased more than expected, but investors focused on the smaller-than-expected gain in wages, which could cause the Federal Reserve to rethink more aggressive on rate hikes.

It’s All About the Treasuries and the Greenback

Don’t try to trade the headlines, but watch the Treasury yields and the dollar. The headlines will fool you, plus they are behind the market. On Friday, the 10-year Treasury yield dropped more than 18 basis points to 3.743%. Lower yields make non-yielding gold a more attractive investment.

Remember too, we are dealing with investments and not safe-havens.

Daily April Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. The trend turned up earlier today when buyers took out $1864.40. A move through $1810.80 will change the main trend to down.

The key resistance is a long-term Fibonacci level at $1889.50. The key support is the long-term 50% level at $1843.40.

Daily April Comex Gold Technical Forecast

Trader reaction to a pivot at $1862.40 is likely to determine the direction of the April Comex gold futures contract into the close on Friday.

Bullish Scenario

A sustained move over $1862.40 will indicate the presence of buyers. If this creates enough upside momentum then look for a late session surge into $1889.50.

Bearish Scenario

A sustained move under $1862.40 will signal the presence of sellers. This could trigger a late session break into $1843.40.

For a look at all of today’s economic events, check out our economic calendar.