Gold, XAU/USD Await Signals as Credit Suisse Borrows $54B from Swiss National Bank

Key Takeaways

• April Comex gold futures, XAU/USD slightly lower.
• Wild swings in US Treasury yields causing heightened volatility in gold and US dollar
• Uncertainty in banking sector leading investors to wait for additional signals
• Goldman Sachs cites stress faced by small banks in increasing probability of US recession to 35%

Overview

Gold futures are slightly lower on Thursday after bullish traders hit the pause button as they awaited further developments related to the banking sector crisis, with Credit Suisse becoming the latest focal point.

At 08:53 GMT, April Comex gold futures are trading $1924.30, down $7.00 or -0.36% and XAU/USD is at $1919.24, down $2.045 or -0.11%. On Wednesday, the SPDR Gold Shares ETF (GLD) settled at $178.20, up $1.37 or +0.78%.

Credit Suisse Borrows $54B from Swiss National Bank to Improve Liquidity

Credit Suisse announced its plan to borrow up to 50 billion francs ($54 billion) from the Swiss National Bank to improve its liquidity, which helped to slow down the sell-off in equity markets. Investors had been investing in gold due to the banking crisis, but are now waiting for additional signals.

Traders Eyeing Treasury Yields, US Dollar

Wild swings in U.S. Treasury yields have contributed to gold’s volatility this week, and will continue to do so as long as there is instability in the banking system. This is also causing heightened volatility in the U.S. Dollar.

Gold is influenced by Treasury yields since the asset doesn’t pay interest. It’s also a dollar-denominated commodity, which impacts foreign demand.

More Uncertainty Ahead…

Furthermore, the market predicts a 68.9% chance of a 25 basis-point hike at the U.S. Federal Reserve’s March meeting, and Goldman Sachs has increased its probability of the U.S. economy entering a recession in the next 12 months to 35% due to stress faced by small banks.

Daily April Comex Gold Technical Analysis

The main trend is up according to the daily swing chart. A trade through $1942.50 will signal a resumption of the uptrend. A move through $1813.40 will change the main trend to down, but it remains vulnerable to a potentially bearish closing price reversal top.

Support is layered at $1912.40, $1893.00 and $1889.50. Minor resistance is $1942.50, while major resistance comes in at $1975.20.

Daily April Comex Gold Technical Forecast

Trader reaction to $1912.40 will determine the direction of April Comex gold on Thursday.

Bullish Scenario

A sustained move over $1912.40 will indicate the presence of buyers. Taking out $1942.50 will indicate the buying is getting stronger. This could trigger an acceleration to the upside with $1975.20 the next major target.

Bearish Scenario

A sustained move under $1912.40 will signal the presence of sellers. This could trigger the start of a labored break with the first target $1889.50, followed by a short-term retracement zone at $1878.00 to $1862.70.