- Gold prices fade two-day rebound from monthly low amid mixed concerns over Ukraine-Russia.
- Fears of Russian default, anxiety ahead of Xi-Biden call weigh on market sentiment.
- Yields, stock futures remain pressured, DXY rebounds from weekly low.
- Will Russia have to invade its $130 billion pot of gold?
Gold (XAU/USD) bears keep controls while bracing for the worst week since late November, down 0.50% intraday around $1,932 during early Friday morning in Europe. In doing so, the yellow metal snaps the two-day recovery moves from the lowest level in a month.
The metal’s recent weakness could be linked to the US dollar’s rebound, as well as the risk-off mood, amid mixed headlines concerning the Ukraine-Russia crisis and China. Also contributing to the XAU/USD weakness could be the cautious mood ahead of today’s call between US President Joe Biden and his Chinese counterpart Xi Jinping.
The US Dollar Index (DXY) snaps a three-day downtrend while defending 98.00 level of late. Even so, the greenback gauge stays negative on a weekly basis. The risk-off mood could also be witnessed in the downbeat figures of S&P 500 Futures and mildly offered Asia-Pacific stocks.
Among the key catalysts is the absence of positive progress over the Ukraine-Russia peace talks and Western warnings that Moscow may use nuclear weapons during Kyiv’s invasion. Further, a fresh jump in China’s covid cases and a confirmation of security talks between Beijing and Russia by the China Foreign Ministry. Also, fears of Russia’s default and likely sour sentiment when Biden talks to Xi add strength to the risk-off mood.
It should be noted that the continuation of Kyiv-Moscow negotiations and Turkey’s push for a meeting between Russian President Putin and his Ukrainian counterpart Volodymyr Zelenskyy keep traders hopeful.
Even so, an absence of major updates and data keeps the traders guessing ahead of the key meetings.
Technical analysis
Gold prices take a U-turn from the 10-day EMA, amid bearish MACD signals and descending RSI line, to keep sellers hopeful.
However, a horizontal area comprising multiple levels marked since November 2021, around $1,880-77, appears a tough nut to crack for the bears.
That said, the $1,900 threshold and the latest swing low of $1,895 can restrict immediate declines of the metal.
On the contrary, an upside break of the 10-day EMA level of $1,948 isn’t a green card for the XAU/USD bulls as the previous support line from early February, near $1,973 by the press time, will challenge the further upside.
It should be noted, though, that gold’s clear run-up beyond $1,973 won’t hesitate to pierce the $2,000 psychological magnet.
Gold: Daily chart
Trend: Further weakness expected
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