Gold likely to probe again above $2000 barrier
Gold is consolidating under new one-year high ($2009) after bulls cracked psychological $2000 barrier on Monday.
The yellow metal surged 3.6% last Friday after worries that the crisis in global banking sector is deepening, sparked strong risk aversion, prompting traders into safety.
Immediate action by Swiss lender UBS to buy troubled Credit Suisse, provided some relief but did not fully restored the confidence, keeping the conditions fragile and risk aversion mode in play, as markets await fresh news.
Apart from banking crisis, investors focus on the US Federal Reserve, which starts its two-day policy meeting tomorrow and due to release its decision on Wednesday.
Initial euphoria from early last week, when markets were speculating about extended rate hikes period and possible acceleration in policy tightening, to curb stubbornly high inflation, was mainly offset by fresh and negative signals of a bigger crisis brewing in the financial system.
Markets now see much more cautious approach by Fed, with currently prevailing expectations for keeping rates unchanged, against falling percentage of possibility for a 25 basis points hike.
If this was the scenario, then the US policymakers probably have more information about the crisis and aware that raising rates in such conditions would be like adding an oil into the fire.
Some US media speculated that a much bigger number of US banks is currently at increased risk, with growing fears that a massive withdrawals of deposits would trigger a domino reaction and cause a collapse of much more banks.
Bullish daily and weekly technical studies contribute to overall positive outlook, though overbought conditions suggest that consolidation is to precede fresh push higher.
In addition, psychological $2000 level marks very significant barrier, which is unlikely to be taken out on the first attempt, with current easing so far seen as a positioning for fresh advance.
Initial and solid support lays at $1959 (former top of Feb 2) and should ideally contain, though deeper pullback cannot be ruled out, but extended dips should find firm ground at $1920 zone, to keep larger bulls in play.
Caution on sustained break below $1900 handle, which would sideline bulls.
Firm break of $2000 pivot would expose targets at $2070 (Mar 2022 peak) and a $2074 (Aug 2020 record high), with $2100 (round-figure) and $2114 (Fibo 200% projection) to come in focus on bullish acceleration.
Res: 2000; 2009; 2018; 2037
Sup: 1968; 1959; 1920; 1900