December 3, 2023

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Gold price prediction: XAU/USD forms a shooting star pattern

2 min read
  • Gold price has risen in the past few days as safe-haven demand rises.
  • Many investors and cash holders are expected to move to its safety.
  • It has formed a shooting star pattern on the daily chart.

Gold (XAU/USD) price has done well in the past few days as investors move to the safe haven. It jumped to a high of $1,894, the highest level since February 3. It has risen by ~3.95% from the lowest level this month as the US dollar index (DXY) has pulled back sharply.

Gold as a safe-haven

The happenings of the past few days have been beneficial for gold, which is often seen as a safe haven in the financial industry. In the past seven days, we have seen the collapse of three banks – Silvergate Capital, Silicon Valley Bank, and Signature Bank. 

The impact of these collapses is that thousands of people and companies have seen their uninsured deposits disappear. Fortunately, US authorities have put in place backstops that guarantee that these depositors will get their money. 

Therefore, gold price jumped as some investors predicted that the metal will see some inflows in the coming months. This will likely happen as people and companies move to gold, which is seen as the asset to hold in times of turmoil. 

Gold price also jumped as the US dollar index dived in the past few days. The DXY, which measures its performance against a basket of currencies, declined from $105 to about $104. This decline happened after analysts changed their tune on the Federal Reserve.

In a report, analysts at Goldman Sachs warned that the Fed will likely take a second look at their policies in the coming meeting. They expect the bank to hike rates by 0.25%, lower than the previous estimate of 0.50%.

The next key gold news will be the upcoming American inflation data scheduled for Tuesday. Analysts believe that the country’s consumer inflation remained above 6% in February. Gas prices have risen to $3 while used car prices have soared.

Gold price prediction

Gold price

XAU/USD chart by TradingView

The daily chart shows that the XAU/USD pair is forming a shooting star pattern. This pattern is characterized by a long upper shadow and a small body and is usually a bearish sign. It has moved slightly above the 25-day and 50-day moving averages and the key support level at $1,856 (March 6 high). 

Therefore, while the recent news has been bullish, we can’t rule out a situation where gold price pulls back in the coming days because of the shooting star pattern. As such, gold will likely retest the key support at $1,850.

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