Gold Price Forecast: XAU/USD Gains More Than 3%, Approaches $2,000

By Matias Salord of FXStreet

Saturday, March 18, 2023 3:25 PM EDT

Photo by Dmitry Demidko on Unsplash

The price of gold surged on Friday, extending weekly gains.
The new context of lower yields and banking jitters boosted gold’s demand.
The XAU/USD pair saw one of the best weeks in years.

The price of gold moved further to the upside during the last few trading sessions, breaking above $1,980. Late on Friday, the XAU/USD pair stood at $1,982, the highest level seen since April 2022 as it aimed to mark the third-highest weekly close on record.

From the level it was at a week ago, the yellow metal has since moved up by 6.3%. A sharp reversal in Treasury yields has been driving the rally in gold. Bonds experienced a rather rough week. Financial turmoil weighed on monetary policy expectations as well as the economic outlook.

Next week, the Federal Reserve will announce its decision. A 25 basis point rate hike is expected. A few days ago, many analysts were expecting a hike of around 50 basis points after the US inflation and employment data. However, the new scenario even includes the odds of a pause at the upcoming meeting. Things have changed dramatically, triggering an impressive rally in XAU/USD.

Seeing the price of gold strike above $2,000 next week may be likely. Even when the price moves consistently to the upside, it can often make sharp corrections. In the current context, traders should take extra caution.

Technical Levels

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