Gold Returns Above $2,000 in No Time, but Can It Hold?

Gold XAU peaked above $2,000 again yesterday after the failure early this week, but let's see if buyers can keep the bullish momentum

Skerdian Meta•Friday, March 24, 2023•2 min read

Gold turned bullish this month as the banking crisis turned the attention into safe havens such as Gold and alternative finances, such as cryptocurrencies. The price briefly rose above $2,000 on Monday but buyers couldn’t hold the gains and XAU retreated back quickly, ending up down to $1,935.

However, the ongoing banking turmoil in the US where the effects are being felt more than in Europe and expectations that the FED may have to cut interest rates later this year have given Gold another boost, with the price rising by $36 today to $2,004 according to my broker. The price retreated below $2,000 once again, but it remained close to that big level and this was still the highest close in a year.

This is the third major test of the $2,000 level this cycle, and while gold has struggled to maintain that level in the past, there is an old technical saying that if you keep banging on a door, eventually it will open. However, caution is warranted given that GOLD is currently at a seasonal low.

On the other hand, there is mounting evidence that sovereigns (governments) are buying Gold, which could be an unstoppable force. The growing alliance between Russia, China, and Middle Eastern states could lead them to shift away from US dollar reserves and towards precious metals.

If central banks starts reversing and cutting rates this year, it could also signal that they are OK with inflation, and there’s not much they can really do, which would be positive for Gold. Overall, while the risk-reward proposition for Gold longs is not that great around these levels, the resilience this week on days when banking fears have eased is encouraging. So, if Gold climbs and holds above the $2,00 level, then we might go long with it. Otherwise, we will open a long term sell Gold signal if buyers fail to keep the price above $2,000.

Gold XAU Live Chart

GOLD

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.