- Summary:
- Gold Price Forecast: XAU/USD is appears to be set for massive gains in 2023. However, there maybe a slight pullback before another leg up.
Gold price (XAU/USD) appears to be in a bull market after making a strong comeback in 2023. Since the start of the year, the precious metal is up 8.68%. This is a remarkable rebound after a sluggish 2022, during which it kept facing headwinds due to rising interest rates.
After a positive start to the week, Gold price per ounce started to drop on Wednesday. The pullback has resulted in 3 consecutive red days for the global preferred store of value. On Friday, XAU/USD fell by 0.21% and was trading at $1983 at press time.
Gold To Face Tailwinds From the Banking Crisis
After witnessing the collapse of multiple regional banks in the US, the markets thought that the worst was already over. This was evident from the strong bounce in the equities and other risk assets. However, another regional lender in the US, known as First Republic Bank, has recently started to face some serious financial troubles.
This situation has once again increased the banking concerns among the major investors. The troubled bank reported a 40% decline in its deposits during Q1. While Gold price is expected to face some turbulence from the banking fears, in the long term, the situation may still work out in favor of the global safe haven assets.
Gold Price May Drop More
Even though on a higher timeframe, XAU/USD chart is looking very bullish, on a shorter timeframe, there can be a deeper pullback. This is because the ongoing price rally appears to be too quick for a healthy bull run. Therefore, in the next few weeks, the Gold price forecast of $1928 is quite likely to be met.
This level is actually the 0.5 fib retracement zone which is often hit after an extended price rally. Another factor behind this correction could be the recent bounce in the DXY index. After a steep drop, the dollar strength index rose by 0.6% today. This was one of the primary reasons behind the negative price action in Silver and Gold.
I’ll keep posting my updated outlook on Gold and other assets in my free Telegram group, which you’re welcome to join.
