Prediction for the price of gold: The decline from annual highs is ongoing as the Credit Suisse

When global financial worries subside and US Treasury yields find support, the price of gold declines from its yearly high, supporting a higher US Dollar. As it continues to consolidate within a technical uptrend, the precious metal is trading at $1,972 at the time of writing.

News on gold: Banking recovery eases

After Credit Suisse, the most recent victim of the current neo-financial crisis was swallowed up by rival UBS on Monday, the dust has settled, and gold, the ultimate safe-haven, has lost the upward impetus that helped it reach YTD (Year to Date) highs above $2,000.

According to a recent report on Monday, the treasury staff in the United States are exploring ways for regulators to insure bank deposits for more than the current Federal Deposit Insurance Cap (FDIC) of $250,000. This move is aimed at increasing confidence in the banking system and reassuring investors that authorities are willing to step in to stabilize the system.

As a result of this development, the US Dollar has gained momentum, with the US Dollar Index rising by 0.20% on the day. The index tracks the performance of the world's reserve currency against a basket of counterparts. Since Gold is priced in US Dollars, it typically has an inverse relationship with the US Dollar. This means that as the US Dollar strengthens, it takes less of them to buy the same quantity of Gold, all other things being equal.

The next significant event for both Gold and the US Dollar is the FOMC meeting scheduled for Wednesday, March 22. During this meeting, the US Federal Reserve will announce its next monetary policy decision. The current odds favor a modest increase of 0.25% in interest rates, which is lower than previously expected.

However, if the Fed decides to raise interest rates by 0.50%, it will boost the Dollar and push down the price of Gold. Conversely, if no rate cut is announced at all, the opposite effect will occur, with Gold prices potentially rising.

Overall, the treasury staff's efforts to increase confidence in the banking system, combined with the upcoming FOMC meeting, have had a significant impact on the Gold market. Investors should continue to monitor these events closely to make informed decisions about their investments in the Gold market.

According to technical analysis: The gold price is currently in an uptrend on both short and medium timeframes. It has been climbing within a steep channel but recently began pulling back after reaching a peak on Monday.

The Average Directional Indicator (ADX) on the 4-hour chart is currently at a very high reading of 55. ADX measures the strength of an asset's price trend, and a reading above 50 often indicates that the trend is nearing exhaustion. Given the high reading of the ADX, combined with a two-bar reversal pattern from Monday's highs and a steady decline since then, it is possible that Gold price may continue to pull back further, potentially reaching the base of the channel in the $1,960 region.

Despite the current pullback, the overall trend remains bullish. Once the correction is complete, it is likely that Gold prices will continue to rise. However, if there is a decisive break and close below the lower channel line, it could indicate a deeper correction or even a reversal of the uptrend. Investors should continue to monitor Gold prices closely and make informed decisions based on technical analysis and market trends.

Read about the market analysis for the fourth week of March 2023.