Gold traded above $2,000 on Monday but quickly fell to $1930
However, continued turmoil at banks and expectations that the Federal Reserve will be forced to cut interest rates this year helped gold rally again.
The $2,000 level has proven to be problematic for gold in the past, as gold closed above $2,000 for one day last March at the start of the Ukraine war, only to reverse the next day and fall to $1,625 by September.
This was the third time gold tested the $2,000 level. Technical analysts believe that when a resistance or support level is tested several times, that level will weaken and eventually break.
However, seasonally, gold is usually under downward pressure, so caution should be exercised when buying gold. At the same time, there is growing evidence that governments are buying gold, which could be an unstoppable force.
The growing alliance between Russia, China, and the Middle East countries is a reason for all of them to replace their dollar reserves with precious metals.
An early turn in contractionary policy would question the US central bank’s determination to fight inflation, and this would undoubtedly be a strong signal to buy gold.
Right now, the risk-to-reward ratio doesn’t look attractive for buying gold, but gold’s resistance this week is encouraging on days when fears of bank failures have calmed down a bit.