Gold (XAU/USD) price per ounce is having a slight pullback after a massive surge in the past few weeks. Bullion has outperformed most of the stock indices his year as many analysts predict another all-time high this year. The rise in the price of Gold also shows that the investor demand for safe-haven assets is on the rise once again.
The XAU/USD pair has started this week with a positive price action. On Monday, the precious metal was trading 0.30% higher during its London session. Silver price per ounce surged even more and had gained 0.70% till press time.
Why Is XAU/USD Surging?
There are multiple tailwinds for the price of the global preferred store of value. The biggest of them all is the weakening US Dollar. The DXY index, which is also known as the Dollar strength index, has been 3.90% down in the last 40 days. The index tracks the strength of the US dollar against the six major global currencies.
Apart from the weakening Dollar, the shaking faith in the global banking system has also increased the demand for safe havens like gold and silver. Consequently, the Gold price is up 11.3% since the collapse of Silicon Valley Bank (SVB) in March 2023. Bitcoin has even outperformed Gold with 50% gains since the bank failure in the US.
Gold Price Can Go Much Higher
There has been a significant increase in the reserves of major central banks across the globe since last year. This is the major tailwind for the XAU/USD pair, which is on track to make a new all-time high this year. The following data shows the accumulation of Gold by the central banks.
On technical grounds, the Gold price forecast remains bullish, but the recent price rally seems to be overextended. In the coming days, there is a higher likelihood of a pullback below $1950. Such a pullback can be a good buying long-term buying opportunity before the US economy starts to show signs of a recession. The invalidation will be a breakdown from the upward trendline.
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