GOLD prices declined slightly after reaching new high of $1,915

Yesterday the gold has continued to grow over the 61.8% Fibonacci level without seeing a rebound in that area, but today the price, after reaching the 1915 area, seems ready to have a short impulse to come back inside the bearish channel .

Despite hitting a fresh monthly high around $1,915 the price of gold has slightly declined on the day, primarily due to falling US Treasury bond yields. Gold is well-known for its inverse correlation with US Treasury (UST) bond yields, but its correlation with real UST bond yields is stronger than with nominal yields.

Recently, the fallout of Silicon Valley Bank (SVB) and speculation surrounding the deteriorating US financial system have caused market participants to scale back bets on an aggressive rate-hiking path from the Federal Reserve (Fed). As a result, UST yields have been decreasing upon dwindling expectations of a 50 basis point rate hike from the Fed at the March 22 meeting.

Investors are likely to remain indecisive until the Fed provides more clarity on the spread of the contagion in the US banking sector. Many market forecasters have shifted their view on the Fed's rate-hiking plan, with no consensus view for the March FOMC meeting.

One argument in favor of the Fed's rate-hiking cycles is their urgency to "do whatever it takes" to control inflation. However, the Fed cannot continue to hike rates while underlying issues in the financial system persist.

The US economic calendar features the US Consumer Price Index (CPI) data for February, with attention focusing on the sticky service-led inflationary portion, which is the Fed's focus. If the inflation reading comes in higher than expected, the Fed will face a difficult situation as the service sector is essential to most developed economies and service-led inflation tends to be irreversible.