Gold prices held above the key $1,900 per ounce level on Tuesday as expectations of less-aggressive Federal Reserve rate hikes after the collapse of two big U.S. regional banks lifted non-yielding bullion’s appeal.
FUNDAMENTALS
* Spot gold was trading flat at $1,913.54 per ounce. The U.S. gold futures were also listless at $1,916.20.
* Gold prices jumped more than 2 per cent on Monday to hit their highest since February 3 at $1,914.58 despite efforts by U.S. officials to limit the fallout from the now-shuttered Silicon Valley Bank and restore investor confidence in the banking system. The regulators had shuttered New York-based Signature Bank on Sunday.
* HSBC bought the UK arm of Silicon Valley Bank for a symbolic one pound on Monday, rescuing a key lender for technology start-ups in Britain.
* Markets are now largely pricing in a 25-basis-point rate hike at next week’s Fed policy meeting, with a 31.4 per cent chance of a pause in hikes.
* Gold is considered a hedge against economic uncertainties, and tends to gain on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
* The U.S. consumer price index (CPI) report for February due at 1230 GMT will be closely watched for cues on the Fed’s rate-hike plan.
* The dollar index was up 0.2 per cent, making bullion more expensive for buyers holding other currencies.
* SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 1.31 per cent to 913.27 tonnes on Monday from 901.42 tonnes on Friday.
* Spot silver edged up 0.1 per cent to $21.83 per ounce, platinum eased 0.1 per cent to $995.21 and palladium was unchanged at $1,473.33.
TECHNICALS
The spot gold may retest a resistance of $1,917 per ounce, a break above could lead to a gain into the $1,925-$1,938 range.
A wave c has travelled above its 176.4 per cent projection level of $1,905. It is likely to extend into a range of $1,938-$1,951. A retracement analysis on the downtrend from $1,959.60 to $1,804.20 reveals a break above the key resistance of $1,900.
The chances are high for $1,959.60 could be revisited soon. The support is at $1,894, a break below which may be followed by a drop to $1,884.
On the daily chart, gold may have resumed its uptrend from the Nov. 3, 2022, low of $1,615.59, as confirmed by the successive gains over the past three trading sessions.
A projection analysis on the uptrend from $1,727.50 marks a target zone of $1,963-$2,004.
