Gold Prices Remain Close to 1-1/2 Month Peak Despite Ongoing Banking Crisis Concerns

Key Takeaways

• Gold prices lower despite concerns over banking crisis.
• Safe-haven demand for gold persists amidst elevated anxiety.
• Fed’s potential rate hike could pressure gold in the near-term.

Overview

Even as concerns about the ongoing banking crisis persisted, gold prices finished lower on Thursday despite remaining close to a 1-1/2 month peak.

On Thursday, April Comex gold settled at $1939.70, down $8.40 or -0.43%. The SPDR Gold Shares ETF (GLD) closed at $178.54, up $0.33 or +0.18%.

Gold Remains a Safe-Haven Asset as ECB Hikes Rates Despite Financial Instability Risks

The European Central Bank (ECB) surprised the market with a 50 basis point hike, despite calls by investors to dial back policy tightening until markets stabilize. The bank’s decision to raise interest rates amidst financial instability risks has unsettled traders, with concerns that the move could worsen the banking crisis. In this environment, we continue to see safe-haven demand for gold, as elevated anxiety in the marketplace persists.

Gold Price Supported by Broader Market Losses Ahead of Expected Fed Rate Hike

Investors are now focusing on next week’s U.S. Federal Reserve policy meeting, with markets largely expecting the U.S. central bank to raise rates by 25 bps. Higher rates increase the opportunity cost of holding non-yielding assets like gold, making it less attractive to investors. However, broader losses in financial markets, including shares, bonds, and the dollar, have helped support the price of gold.

Gold’s Near-Term Outlook Bullish, but Fed’s Possible 50 bps rate Hike May Cap Gains

The near-term outlook for gold appears bullish, but the Fed’s decision to raise rates by 50 bps next week could put pressure on the precious metal. Despite this, there are positive signs in the labor market, with the number of Americans filing new claims for unemployment benefits falling more than expected last week, indicating continued strength in the labor market.

Daily April Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. However, Thursday’s inside range suggests trader indecision. A move through $1942.50 will signal a resumption of the uptrend. A trade through $1813.40 will change the main trend to down.

Minor support is at $1912.40. The major support zone is $1889.50 to $1843.40. Inside this long-term zone is a short-term retracement area at $1878.00 to $1862.70.

Daily April Gold Technical Forecast

Trader reaction to the Fibonacci level at $1912.40 is likely to determine the direction of the April Comex gold futures contract on Friday.

Bullish Scenario

A sustained move over $1912.40 will indicate the presence of buyers. If this creates enough upside momentum then look for a surge into this week’s high at $1942.50. This is a potential trigger point for an acceleration into the February 10 main top at $1975.20.

Bearish Scenario

A sustained move under $1912.40 will signal the presence of sellers. This could trigger a sharp break into the long-term Fibonacci level at $1889.50, followed by the short-term retracement zone at $1878.00 to $1862.70.