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Gold Threatens $2,000 Area Amid Renewed Banking Jitters

Published 03/24/2023, 01:01 PM
Updated 07/09/2023, 06:32 AM
XAU/USD
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DBKGn
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GC
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Gold prices consolidated near recent highs on Friday, as investors' sentiment deteriorated on the back of renewed banking sector concerns after the stock of the German giant Deutsche Bank (ETR:DBKGn) plummeted over 10%.

At the time of writing, the spot price, XAU/USD, is trading at the $1,995 area an ounce, virtually unchanged on the day. The yellow metal attempted twice this week to break above the $2,000 psychological mark but failed, having posted a one-year high of $2,009.

On Friday, European banking stocks suffered heavy losses, led by Deutsche Bank shares which plummeted more than 10% on a spike in credit default swaps. The risk-averse environment favored the dollar across the board, which has limited the XAU/USD upside.

Gold prices peaked above $2,000 this week after the Federal Reserve delivered a "dovish hike." Even though the FOMC raised rates by 25 basis points as expected, the central bank dropped the hawkish forward guidance. Additionally, the dot plot suggested most FOMC members foresee just one more 25-bps increase this year.

XAUUSD Daily Chart

From a technical perspective, the XAU/USD picture remains bullish, according to indicators on the daily and weekly charts. Still, the weekly indicators have lost bullish momentum, given the XAU/USD failure to consolidate above $2,000.

A decisive break of this level is needed to pave the way higher, with the next bullish target standing at March 2022 high of $2,070 and the $2,100 area. On the flip side, the next support level is seen at the former Fibonacci resistance at $1,970, followed by the $1,900 zone, where the 20-day SMA converges with another retracement level.

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