Strategy
Sell Gold at $1983.50 for a price movement to $1810. Stop should be placed above $2010. Time duration is estimated at about 2-3 months.
Technical View
Price had reached a high of $2009.75 and that high was accompanied by a Spinning Top candlestick price pattern, which is a hint of a possible price high. Stochastic is also hinting at a price decline with a reading above 80. There was a stochastic bearish crossover that is also hinting at a possible price decline. However, 20EMA and MACD are both showing a bullish price trend and a continuation of this price rally. We think price may have reached a high and the move below the previous high at $1959.70 has confirmed the top and a decline back to February 2023 low at $1808.50.
Fundamental View
Price has a strong run up to above $2000 recently due to the banking crisis first in the US with Silicon Valley Bank and Signature Bank, followed by the Credit Suisse saga. However with the Federal Reserve providing liquidity to the banking system to avoid a crisis and UBS bank buying over Credit Suisse, risk sentiment is getting better. This could be detrimental to safe havens like gold.
Inflation in the U.S. had likely peaked and is currently on the recovery path. Gold which is often a hedge against inflation is likely to see less demand as an inflation hedge, weighing on its price. With inflation having reached its peak, the Federal Reserve is also on a less aggressive hike path. However, the Federal Reserve is still going ahead with rate hike and is likely to hike rates a few more times. Market is also expecting a terminal rate above 5%. A higher interest rate is likely to be detrimental to gold and likely to send price of gold lower.