XAU/USD Surges 1% on Dropping Yields – 13 March 2023
13 Mar 2023
Considering a weaker US dollar and declining rates, gold price bulls are aiming for $1,890.
Fundamental Overview
In the last four days, XAU/USD has surged higher and is currently up almost 1% for the day. Dropping US Treasury yields have driven up the price of gold as the market prepares for any potential 50 basis point rate hike for the FOMC meeting in March.
In the last four days, XAU/USD has surged higher and is currently up almost 1% for the day. Dropping US Treasury yields have driven up the price of gold as the market prepares for any potential 50 basis point rate hike for the FOMC meeting in March.
Due to the Federal Reserve’s (Fed) and US Treasury’s intervention in the financial system to save Silicon Valley Bank (SVB) and Signature Bank, XAU/USD benefited from a weaker US Dollar earlier in the Asian session.
 The market has experienced the SVB fallout because of the United States (US) rising borrowing costs, which are damaging financial health.
Given that the price of gold is inversely connected with US Treasury yields and that gold is sensitive to the shorter end of the yield curve, the XAU/USD pair is displaying some strong upward momentum in the aftermath of dropping yield.
Last Friday, following the announcement of the Nonfarm Payrolls (NFP), the shorter end of the yield curve experienced a significant decline. The number of new jobs was larger than anticipated, yet the unemployment rate increased to 3.8%. The market has seen Friday’s NFP as being cautious and chaotic. The US Dollar as well as equities systems around the world are under a lot of pressure because rates are declining globally, particularly at the shorter end of the US Treasury yield curve.
The Consumer Price Index (CPI) data is scheduled to be released by the US economy on Tuesday, but it appears that the market is not looking forward to the approaching CPI event. The market dynamics will probably continue unstable until the FOMC Meeting on March 22 because we are now in the Fed’s “blackout” phase.
GOLD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
Gold price is looking to break above March’s high at the $1,894 mark. A convincing break above will lead the price toward the $1,900 key psychological mark. Any downside will likely be capped around Monday’s low at $1,866.
Gold is currently trading in the up channel.
Gold is currently trading above all SMA.
RSI is in buying zone which suggests bullishness and Stochastic suggests an up trend.
Gold’s immediate resistance is at 1888.63 & its immediate support level is 1875.99
HOW TO TRADE GOLD
Gold is trading in an up channel; currently, it has broken its previous day’s high, and it is trading at its important resistance zone, if it breaks it, we can see gold trading further upside.