“Gold Prices Drop amid US Banking Crisis and Inflation Concerns”

Investing.com – The yellow metal has fallen from the record high levels seen earlier in the week in signs that the Federal Reserve may rise again in June.

It is easy to understand gold’s decline in the event of higher interest rates. Where higher interest rates help to lift (although this has not been the case this week), the dollar and yields are the main enemies of gold. But sometimes gold has special circumstances.

Apart from the expected inflation data this week, which may change the price map and the Fed’s expectations in a strong way. Markets are also concerned that the US banking crisis that has surfaced this week will resurface in March. In addition, there were concerns about a US debt default, first ever and weaker readings for Factory Orders and Durable Goods. As a safe haven, gold is a hedge against these concerns.

Ed Moya, an analyst at online trading platform OANDA, said that gold “still has a good chance of returning to the all-time highs”. Moya noted that US banking concerns do not appear to be about to disappear anytime soon due to the exposure of regional banks to commercial mortgages.

“Regulators are scrambling and don’t have a clear plan to tackle the regional banking crisis,” Moya said, adding that asking big banks to come up with money to refill the deposit insurance fund hole left by smaller, failing banks was “just another scope-aid solution.”

Friday’s trading ended at $2024.60 an ounce, down by 1.51%. The lowest level for gold was also on Friday when futures contracts recorded $2007 before rebounding. The highest level of gold in the past week was on Thursday when gold traded at 2082.80, which is the highest level ever.

Spot gold contracts closed at $2017.56, down by 1.59%. Gold contracts breached the $2000 level, and gold touched Friday’s lowest level at $1,999.66. As for the highest level, it was recorded on Thursday, when spot gold traded at a record high of $2,080.72.

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Gold: technical forecasts for spot prices

Dixit of SKCharting said that spot gold needs to recover the $2028 and $2032 zones to resume the upside move, which will target $2050 and $2080. “The initial resistance on the upside will be $2,098,” he said. On the other hand, Dixit added that a sustained break below the 50-day moving average of $1,998 and below $1,993 will extend the downside for gold to $1,977 and $1,968.

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Technical analysis of gold