The US dollar strengthened again on Tuesday yesterday as market sentiment turned to risk following re-emergence of concerns over the banking crisis.
The situation was triggered by the collapse of shares of First Republic Bank by almost 50% while UBS reported a decline of more than 50% in quarterly earnings.
However, despite the strengthening of the US dollar, gold trades survived the fall in value.
This is due to gold as a safe-haven asset also gaining traction in the market's risk-off sentiment as well as being supported by the decline in the 10-year US Treasury yield.
Examining the XAU/USD price chart which measures the value of gold against the US dollar, the price initially fell to 1976.00 as trading headed into the New York session yesterday.
However, the price of gold managed to jump back to the 2000.00 level near the end of the session and closed trading around that.
Continuing trading today (Wednesday), the price hovered slowly below the 2000.00 level with price movement above the Moving Average 50 (MA50) support level on the 1-hour time frame on the XAU/USD chart triggering early indications for a bullish pattern.
If the price manages to display a more energetic surge breaking through the 2000.00 level, a higher rally is expected towards around 2030.00 before retracing the previous high at 2048.00.
On the other hand, if the price fails to break above the 2000.00 level, the price of gold can bounce back down to the weekly support zone around 1970.00.
Continuing to decline lower would expect the price of gold to reach the concentration level at 1950.00 again.
