Gold Price Forecast: XAU/USD Hits New Multi-Week High Amid Risk Aversion, Falling Yields

• The gold price regains strong positive momentum on Friday and reaches its highest level since February.
• Fears of a global banking crisis weigh on investor sentiment and lift the safe haven of XAU/USD.
• Bets on a less aggressive Fed, falling US bond yields and a weakening dollar provide additional momentum.

the price of gold receives new offers after the previous day, in which prices moved without direction, and continues with its positive intraday movement during the first hours of the American session. The XAU/USD pair rallied to a fresh six-week high around the $1,946 zone in the past hour and remains on track for its biggest weekly gain since mid-November.

A new wave of risk-averse global trading – as reflected in the resumption of selling in equity markets – boosts demand for traditional safe-haven assets and benefits the price of gold. Despite multi-billion dollar lifelines for banks In troubled US and European markets, investors are still trying to determine whether the risk of a full-blown global banking crisis has been controlled and they remain concerned about widespread contagion. In addition, looming recessionary risks weigh on risk sentiment and drive safe haven flows into precious metals.

In addition, the sharp drop in US Treasury yields is seen as another factor benefiting the gold price without yields and continues to support the strong intraday rally. The current contrary to risk, together with the increase in bets on an interest rate rise of less than 25 basis points (bp) in the next meeting of the Federal Open Market Committee (FOMC) on March 21 and 22, drag down US bond yields. Investors now seem convinced that the Fed will take a less aggressive stance after last week’s failure of two mid-sized US banks: Silicon Valley Bank and Signature Bank.

Meanwhile, declining odds of more aggressive policy tightening by the US central bank, coupled with falling US bond yields, support the US dollar. .depressed for the second day in a row. A weaker dollar drives the dollar-denominated gold price further, leading to some short-term trading stops near the previous weekly/monthly high around the $1,937 area. This could have set the stage for a further short-term appreciation move towards the $1,959-1,960 area, or the multi-month high reached in February.

Technical levels to watch