GOLD:Price Rises on Weak USDollar and Easing Banking Crisis Fear

The price of gold is fluctuating within a bullish chart pattern that has been in place for the past two weeks. Recently, there has been a lack of momentum, but the decrease in concerns regarding a banking crisis, along with a weaker US Dollar, has led to an increase in demand for gold. This, combined with hopes of positive core inflation data from the Eurozone and the United States, and tensions between China and the US, has propelled the XAU/USD bulls.

During Friday's Asian session, the XAU/USD reached $1,980, reversing the previous week's losses ahead of key inflation data from both the United States and Eurozone. It is worth noting that despite concerns regarding further rate hikes by the Federal Reserve, the gold price is being driven by a risk-on mood and a lack of conviction in the Fed's stance.

The weak performance of the US Dollar is also contributing to the rise in the gold price, even though the hawkish Fed concerns and mostly positive US data are challenging buyers of XAU/USD. The increase in the XAU/USD could also be linked to quarter-end positioning of the US Dollar Index (DXY), which has been on a three-week downtrend, with bears pushing it to the 102.15 level.

Despite Federal Reserve Chairman Jerome Powell and three other Fed Officials backing further rate hikes, mixed US data has cast doubt on the hawkish rhetoric of Fed policymakers, thereby allowing the gold price to remain strong. This has been due to sluggish yields and hopes of a secure banking system.

Mixed US data and a risk-on mood have failed to strengthen the US 10-year Treasury bond yields, which remain under pressure at around 3.55%, while the two-year counterpart is on track for its first weekly gain in four, currently grinding higher around 4.12%. Hence, sluggish yields, mixed data, and a mostly positive sentiment have combined to allow the gold price to remain strong.