GOLD PRICE FORECAST: XAU/USD FORGE BULLISH PATH ABOVE $1,960, FED, BANKING TURMOIL EYED – CONFLUENCE DETECTOR

Gold price (XAU/USD) regains upside momentum, following the pullback from a Year-To-Date (YTD) high, amid cautious optimism surrounding the banking sector. Adding strength to the recovery moves could be the market’s inaction amid the Japanese holiday, as well as the failures on the part of the US Treasury bond yields to extend the recent corrective bounce off a six-month low.

Headlines suggesting the US policymakers’ search for ways to insure all banking deposits join the UBS-Credit Suisse deal and major central banks’ rush to keep the markets liquid with the US Dollar flow seem to favor the Gold buyers.

It’s worth noting, however, that the latest read of the CME’s FedWatch tool mentions the probability of witnessing a 0.25% Fed rate hike on Wednesday as near to 75%, up from the last week’s 65%, which in turn allows the US Treasury bond yields to rebound. That said, Treasury bond yields remain inactive as Japan’s holidays limited bond trading in Asia. It’s worth noting that the US 10-year and two-year Treasury bond yields bounced off the lowest levels since September 2022 the previous day.

Moving on, Fed’s reaction to the banking crisis will be crucial for Gold traders to watch as the 0.25% rate hike is already given. Should the dot-plot tease policy pivot, the US Dollar can have a further downside to trace, which in turn can propel the XAU/USD price.

Also read: Gold Price Forecast: XAU/USD grinds beyond $1,940 support, banking crisis, Federal Reserve in focus