- Gold consolidates the biggest daily jump in four months.
- Friday’s risk-off mood dragged yields and fuelled USD, gold prices amid escalating concerns over Russia-Ukraine war.
- Easing chatters over Fed’s 50bp rate-hike in March also weighed on bond coupons and will be watched in FOMC Minutes.
- Gold Weekly Forecast: Is gold finally regaining its inflation-hedge status?
Update: At $1,858, gold (XAU/USD) is flat in the Asian session in jittery markets at the start of the week. However, the yellow metal remains close to a 3-month peak as investors seek safety amidst warnings from the United States that Russia could invade Ukraine at any time.
Moscow has denied any plans of an invasion and has accused the West of "hysteria", despite the employment of more than 100,000 troops near Ukraine. markets are bracing for dangerous times ahead which is potentially underpinning the US dollar as well as the yellow metal. However, ''without sustained buying flow, gold prices are likely to succumb to the substantially higher real rates amid a hawkish regime at the Fed,'' analysts at TD Securities argued.
In this regard, the Federal Open Market Committee meeting minutes will be watched for the week ahead and traders will be paying particular attention to any discussions regarding near-term policy plans. Analysts at TD Securities explained that the market will be paying particular attention to plans for balance sheet normalization steps, following the release of the normalization "principles" in Jan.
End of update
Gold (XAU/USD) prices seesaw around the three-month high flashed the previous day, taking rounds to $1,860 during Monday’s quiet Asian session.
The yellow metal rallied the most since October 2021 on Friday after receding probabilities over Fed’s 0.50% rate-hike, backed by softer US data, joined widespread fears of Russia’s immediate invasion of Ukraine.
The CME FedWatch Tool suggests around 50-50 chances of 50 basis points (bps) of a Fed-rate-hike in March versus a 0.25% move. Previously, especially after the US Consumer Price Index (CPI) release, the market was almost certain of a higher boost to the rates. That said, the preliminary readings of the US Michigan Consumer Sentiment for February eased from 67.2 to 61.7 on Friday.
Elsewhere, the US warned over Moscow’s preparations for immediate war with Ukraine and urged all of its citizens to leave Kyiv. The UK and Eurozone policymakers also cited Russian preparations for an immediate war. However, the AFP News recently quoted Russian Leader Vladimir Putin saying to his French counterpart Emanuel Macron that Ukraine invasion claims are 'provocative speculation’.
Amid these plays, the US 10-year Treasury yields dropped over 11.0 basis points (bps) while Wall Street benchmarks also witnessed heavy losses due to the risk-aversion wave. The sour sentiment could also be witnessed by S&P 500 Futures that drop 0.15% intraday at the latest.
Looking forward, gold traders may await more clues from the Russia-Ukraine story and Fed’s rate-hike concerns for near-term direction. As a result, this week’s FOMC Minutes will be a crucial event to watch while also keeping eyes on geopolitics for fresh impulse.
Read: New Geopolitical Threats for 2022: Is Gold in Danger Too?
Technical analysis
On Friday, gold prices portrayed the biggest daily jump in four months as buyers cheered escalating geopolitical tensions surrounding Russia, as well as inflation woes.
The run-up not only registered a fresh high of 2022 but also crossed a downward sloping trend line from June. Given the upbeat RSI and MACD conditions supporting the gold buyers, the latest upside has legs to run ahead.
However, a horizontal area comprising multiple levels marked since May, near $1,873, will be a crucial upside barrier for the metal to cross ahead of targeting the $1,900 threshold.
Should gold buyers keep reins past $1,900, the mid-2021 high surrounding $1,917 will be in focus.
Alternatively, an upward sloping trend line from February 03 close to $1,821 and the 200-DMA level of $1,807 restricts short-term declines of gold.
In a case where gold prices drop below $1,807, the $1,800 round figure and $1,760 will be on the seller’s radar.
Gold: Daily chart
Trend: Further upside expected
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD struggles near 1.0550 amid dour mood
EUR/USD struggles near 1.0550 in the European morning on Thursday. The pair faces headwinds from risk-off flows due to rising geopolitical conflict between Russia and Ukraine and worries over the potential US tariffs on the EU. ECB- and Fedspeak are awaited.
GBP/USD trades around 1.2650, upside potential seems limited
GBP/USD keeps its range near 1.2650 in early European trading on Thursday. The pair's sidetrend could be attributed to the softer US Dollar and a risk-aversion market environment. Traders stay cautious amid rife geopolitical tensions and a light economic calendar. Fedspeak eyed.
Gold price retains its bullish bias near one-week high amid rising geopolitical risks
Gold price maintains its bid tone heading into the European session and currently trades around the $2,660 level, or a one-and-half-week high touched earlier this Thursday. This marks the fourth straight day of a positive move and is sponsored by geopolitical risks stemming from the worsening Russia-Ukraine war.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu (SHIB) trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Sticky UK services inflation to keep BoE cutting gradually
Services inflation is set to bounce around 5% into the winter, while headline CPI could get close to 3% in January. That reduces the chance of a rate cut in December, but in the spring, we think there is still a good chance the Bank of England will accelerate its easing cycle.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.