gold price analysis today

gold price analysis strengthens as the safest haven asset

The price of gold shot up over USD 2,000 per troy ounce, which is equivalent to more than 1% daily, after the opening of the Asian session on Monday, March 20, with strong demand as a safe haven asset due to fears of a global contagion from the crises of banks such as Silicon Valley Bank (SVB), Signature Bank and, in Europe, the giant Credit Suisse. 

The collapse of Credit Suisse and others, like Silicon Valley Bank (SVB) and First Republic Bank before it, was caused by a lack of liquidity. Raising inflation and raising interest rates to combat it has led to a fall in the value of many banks' large holdings of government bonds, reducing the value of their assets. 

This, combined with a massive run by customers seeking to redeem their savings, caused a bank liquidity crisis.

An agreement was unveiled this weekend to allow UBS to absorb Credit Suisse's operations for $3.23 billion, assuming up to $5.4 billion in losses, in a forced merger designed by Swiss authorities to prevent further turmoil in the world banking market. 

Unfortunately, efforts to calm investors and the broader market have not worked, and instead we see safe-haven assets such as gold, yen and US treasuries strengthening at 10 years.

For now, the price of the USD remains lower on the prospect of a Fed rate cut. However, a more pronounced financial crisis will boost the value of the USD as a safe haven asset, just as than gold. This circumstance is, in fact, the only one in which the USD and gold can move in a correlated fashion to the upside.

Technical analysis

XAUUSD

It reached a maximum during the Asian session in 2009.39 and, given that it is trading below the weekly opening in 1984.96, we can expect the correction towards 1960 and 1950, from where to resume buying, especially if greater uncertainty is perceived in the week, and with special observation to a descent with less force than the ascent at the end of the week.

If an increase in bearish force is observed, one can even expect a retest of the POC broken in 1953 towards 1940 in extension, but only if force is observed in the break of the previous round levels (1960 and 1950). The RSI could remain above the overbought zone for another week, driven by the current uncertainty. Gold's bullish target could exceed 2020 on the week if news continues to fuel financial uncertainty.

The Dollar Index (USDX)

It is always the best reference for the behavior of older pairs. Currently extending sell towards Wednesday support at 103.45, entering a February buy zone, with possible extension towards 103 and POC uncovered at 102.95. However, since the downward movement brings less strength than the last rally of the dollar and a bearish wedge has formed, a new rally can be considered in the short term, with the objective of breaking the last relevant resistance at 104.29. which will boost the renewal of purchases in the short term.