Spot gold soared in the European morning and traded as high as $2,009.77 a troy ounce, its highest since March 2022. However, the bright metal quickly retreated and currently trades around $1,970. Investors are trying to recover their optimism after different banks’ failures triggered concerns about global financial stability.

A deal to enable rival UBS to take over troubled lender Credit Suisse over the weekend temporarily reassured investors in the early European session and stabilized sentiment but relief was temporary. Fears around wider banking stability continue to propel investors into safe-haven assets. Stage directions: Enter Solid Gold.

The  XAU/USD pair trades in the red on a daily basis, although hovering at the upper end of last week’s range. The daily chart shows that technical indicators began retreating from extreme overbought readings, although without any kind of bearish strength. Furthermore, the bright metal develops far above bullish moving averages, with the 20 Simple Moving Average (SMA) heading firmly north at around $1,862. The ongoing slide could well be understood as corrective, with immediate support at $1,959.75, February 2 daily high.

The case for a steeper decline is also unclear in the near term. The 4-hour chart shows that technical indicators have lost their downward strength after correcting extreme overbought reading and stabilized well above their midlines. Meanwhile, the 20 SMA maintains its bullish slope, currently standing at around $1,943.60. Far below the latter, a bullish 100 SMA crosses above a flat 200 SMA, also hinting at strong buying interest.

Bears can drag gold to EMA50 before it pushes higher

Mar 20 2023