Gold, as well as other precious metals, are trading higher today. GOLD trades 0.6% higher on the day while SILVER rallies 1.6% and PALLADIUM surges 2.1%. Platinum is a laggard within the group with a 0.9% drop at press time.
While current gains are quite decent, it should be said that precious metals have pulled back from daily highs. GOLD traded as high as $2,078 per ounce during an overnight flash crash on WTI market, reaching the highest level on the record. However, those gains were quickly erased and gold traded in a rather wide range of $2,030-2,060 later on. There is a number of reasons behind solid performance of precious metals with main ones being:
- US banking turmoil - a flight-for-safety can be spotted on the markets as problems of US regional banks have been reignited
- PacWest Bancorp and Western Alliance are rumored to be next in-line to collapse after SVB, First Signature and First Republic
- FOMC strongly hinted that rate hike cycle in the United States may be in for a pause after yesterday's 25 basis point hike
- European Central Bank delivered a 25 bp rate hike today and ruled out that it is about to pause. However, wording of the statement was change and no longer strongly hints at need of additional rate hikes
- US dollar is on the back foot with USD index (USDIDX) dropping more than 1% over the past two days
Taking a look at GOLD at W1 interval, we can see that price tested an all-time high area above $2,070 mark and even briefly managed to trade above August 2020 highs. However, looking at a lower time frame (H1), we can see that a double top has been painted in the $2,059 area. Neckline of the pattern can be found in the $2,032 area and should we see a break below it, textbook range of a downside breakout points to a possible drop to as low as $2,005 per ounce. Nevertheless, should more worrying news from US banking sector surface, gold could benefit from safe haven bids and once again looks towards $2,070 area.
GOLD at W1 interval. Source: xStation5
GOLD at H1 interval. Source: xStation5
