GOLD PRICE FORECAST: XAU/USD SURGES TO WEEKLY HIGH ABOVE $2000 AMIDST DETERIORATING RISK APPETITE

Gold price advanced and printed a new weekly high at around $2003, though it faltered to hold its gains above the $2000 mark. Deteriorated risk appetite sponsored by fears around the United States (US) banking system, increased flows to safe-haven assets. Therefore, the XAU/USD climbs 0.41%, trading at $1997.10, after hitting a low of $1976.26.

Sentiment takes a hist on First Republic Bank. US Consumer confidence drops and New Home Sales, advanced

Wall Street finished the session with losses. Investors’ woes about First Republic Bank admitting a loss of $100 billion worth of deposits in Q1 2023 reignited worries of a spread contagion around the system. Another tranche of US economic data revealed earlier witnessed Consumer Confidence sliding to a level last seen in July 2022, at 101.3, vs. expectations of 104.0, and New Home Sales in March rising, 9.6% MoM, exceeding estimates of 1.1%.

On other data, the Dallas Fed Services Index dropped to -14.4 in April, an improvement compared to March’s -18, while the Richmond Fed Indices, both readings plunged, a signal that the economy is decelerating.

Despite all that, the greenback slightly capped the XAU/USD’s rally. The US Dollar Index (DXY), a gauge of the buck’s value vs. a basket of six currencies, edges high 0.55%, at 101.872, although US Treasury bond yields continued to tumble.

That comes as speculations of a Federal Reserve (Fed) rate hike for May, had diminished, as reported by the CME FedWatch Tool. Odds for a 25 bps lie at 74.7%, less than Monday’s 90.5% chance, as reflected by US bond yields. However, investors have begun discounting two 25 bps rate cuts by the year’s end, as shown by the CME probabilities table.