By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Exceptional, incredible, astonishing, shocking, stunning, and nearly beyond comprehension are just a few of the many adjectives that may be used to describe yesterday’s extremely strong upside breakout in gold.
Gold prices closed around $2090, finally breaking out of the $2000 to $2060 range that had held for the past two months. The outbreak of a fresh banking crisis in the United States prompted safe-haven buying in gold. As we approach the anniversary of Silicon Valley Bank’s demise, distressed banks are reappearing. This could be referred to as Banking Crisis 2.0. (March 11, 2023). New York Community Bancorp (NYCB) named a new CEO, effective immediately, after acknowledging control concerns and a tenfold spike in Q4 losses. The stock fell 28% intraday.
But let’s not forget about the overall geopolitical scenario, since, quite honestly, geopolitics might drive gold higher, as traders will be concerned about the Middle East, future global downturns, and inflation. Also, central banks around the world continue to buy, which is obviously important.
Gold has always been and will continue to be the preferred safe-haven asset. Major central banks are increasing their purchases to reduce risk associated with the US dollar’s dominance in foreign reserves, setting records.
A significant breakout in gold over $2100 (Rs 64000) would signal the start of a strong uptrend. Gold may face a severe test next week, when the February nonfarm payrolls report is released. At the same time, investors will be anticipating what Federal Reserve Chair Jerome Powell will say during his two-day hearing before Congress.
The next resistance level for gold is Rs 65000, while support might be found at Rs 63000. Silver is projected to head higher towards Rs 74000, with firm support at Rs 71000.
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